SSC MTS EXAM

Detailed explanation-1: -According to economic theory, a firm should expand production until the point where marginal cost is equal to marginal revenue.

Detailed explanation-2: -The quantity in which marginal revenue and marginal cost intersect is the optimal quantity to sell; the associated price point is noted as bullet E (where quantity per period and demand intersect).

Detailed explanation-3: -The intersection of the marginal-revenue and marginal-cost curves determines the profit-maximizing level of output, Qm. The demand curve then shows the profit-maximizing price, Pm. 5. The level of output that maximizes total surplus in Figure 1 is where the demand curve intersects the marginal-cost curve, Qc.