A firm will maximize profits and revenues at the same price when:
A) the marginal cost is negligible or zero.
B) the fixed costs are zero.
C) the marginal revenue is zero.
D) the demand for the good is unit elastic.
E) the demand for the good is highly elastic.

Question

Quizplus · Accepted Answer

The firm will maximize profits and revenues at the same price when the marginal cost is negligible or zero. This is because when the marginal cost is negligible or zero, the firm can produce and sell an additional unit of output at a cost that is less than the price it can sell the unit for. This will lead to an increase in both profits and revenues.

A Firm Will Maximize Profits and Revenues at the Same