A firm can maximize profit (net benefit)by choosing to produce that level of output at which
A)the difference between the additional revenue from the last unit sold and the additional cost of that unit is maximized.
B)the additional revenue from the last unit sold equals the additional cost of that unit.
C)the additional revenue from the last unit sold is just a little more than the additional cost of that unit.
D)total revenue equals total cost.

Question

Quizplus · Accepted Answer

The firm maximizes profit by producing at the level of output where marginal revenue (the additional revenue from the last unit sold) equals marginal cost (the additional cost of that unit). This principle ensures that the cost of producing one more unit is exactly covered by the revenue it generates, optimizing profit.

A Firm Can Maximize Profit (Net Benefit)by Choosing to Produce