A profit-maximizing price searcher will expand output to the point where

A) total revenue equals total cost.
B) marginal revenue equals marginal cost.
C) price equals average total cost.
D) price equals marginal cost.

Question

Pradeep Kumar · Accepted Answer

Final Answer : B, Explanation :  A profit-maximizing price searcher will expand output to the point where marginal revenue equals marginal cost. This is because at any output level, producing one more unit will increase revenue by the marginal revenue, and increase cost by the marginal cost. As long as marginal revenue is greater than marginal cost, the firm can increase profit by producing more. However, once marginal revenue equals marginal cost, any further increase in output will decrease profit. Therefore, the profit-maximizing level of output is where these two values are equal.

A profit-maximizing price searcher will expand output to the point where

A) total revenue equals total cost.
B) marginal revenue equals marginal cost.
C) price equals average total cost.
D) price equals marginal cost.

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Learning Objectives

Related questions

A profit-maximizing price searcher will expand output to the point whereA) total revenue equals total cost.B) marginal revenue equals marginal cost.C) price equals average total cost.D) price equals marginal cost.

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Learning Objectives

Learning Objectives

Related questions

A profit-maximizing price searcher will expand output to the point where

A) total revenue equals total cost.
B) marginal revenue equals marginal cost.
C) price equals average total cost.
D) price equals marginal cost.