GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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TR-TC
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MR=MC
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MR cuts MC from below
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slope of MC curve must be higher than that of MR curve
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Detailed explanation-1: -First order condition for the firm profit is to be maximum is MC = MR. Was this answer helpful?
Detailed explanation-2: -MC=MR is the first-order condition for the profit of a firm to be maximum. The Profit Maximization Rule states that if a firm chooses to maximize its profits, it must choose that level of output where Marginal Cost (MC) is equal to Marginal Revenue (MR) and the Marginal Cost curve is rising.
Detailed explanation-3: -The marginal revenue is the additional revenue added by increasing the quantity. This is also known as the additional revenue “at the margin.” Therefore, profit is maximized when marginal cost equals marginal revenue which is the same as saying when marginal profit equals zero.
Detailed explanation-4: -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.