High School Economics Question: Why is profit optimized when marginal cost (MC) = marginal revenue (MR)?

1 Answer

  • Oiy
    Lv 4
    4 weeks ago
    Best Answer

    if the firm produces one unit more output, its marginal cost will rise, while its marginal revenue will decline. The point they cut would be the best equilibrium, which means the highest profit ever.

    • Lv 4
      4 weeks agoReport

      ..unit produced beyond that quantity would cost more to produce than the revenue from it; note that fixed costs donot specifically affect the analysis, since fixed costs are incurred irrespective of output level: the profit Maximisation can actually mean a positive,or zero, or less than zero, profit

Still have questions? Get your answers by asking now.