The message of marginal analysis is to operate up to the quantity and price levels where __________.
A)total revenue equals total cost
B)break-even revenue equals break-even cost
C)average revenue equals average cost
D)price elasticity of demand equals price elasticity of supply
E)marginal revenue equals marginal cost

Question

Quizplus · Accepted Answer

Marginal analysis suggests that firms should operate up to the point where their marginal revenue equals their marginal cost. This is where they will maximize their profits. Therefore, the correct choice is E where marginal revenue equals marginal cost.

The Message of Marginal Analysis Is to Operate Up to the Quantity