ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -Therefore, profit is maximized when marginal cost equals marginal revenue which is the same as saying when marginal profit equals zero.
Detailed explanation-2: -The profit-maximizing choice for a perfectly competitive firm will occur at the level of output where marginal revenue is equal to marginal cost-that is, where MR = MC.
Detailed explanation-3: -In economics, the profit maximization rule is represented as MC = MR, where MC stands for marginal costs, and MR stands for marginal revenue. Companies are best able to maximize their profits when marginal costs–the change in costs caused by making a new item–are equal to marginal revenues.
Detailed explanation-4: -MC = marginal (extra) cost incurred by a firm when its production raises by one unit. MR = marginal (extra) revenue a firm receives from producing one extra unit of output.