ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Sales maximisation (AC=AR) Instead a firm sales maximising will focus on selling as many goods/services as they can without making a loss (they will break even). This is why the breakeven point (AC=AR) is also the same as the sales maximization point.

Detailed explanation-2: -Profits are maximised at an output when marginal revenue = marginal cost. this is also where marginal profit is zero.

Detailed explanation-3: -Theoretically, sales maximization is achieved when a business sells as much of a product or service as possible without making a loss, meaning the average revenue of a product or service is the same as its average cost to produce it.

Detailed explanation-4: -In order to maximize profit, the firm should produce where its marginal revenue and marginal cost are equal. The firm’s marginal cost of production is $20 for each unit. When the firm produces 4 units, its marginal revenue is $20. Thus, the firm should produce 4 units of output.