A firm that is maximizing its profits by producing a certain level of output must also be
A)minimizing its cost of producing that output.
B)maximizing its revenue.
C)minimizing its variable costs.
D)maximizing its sales.
E)maximizing its output.

Question

Quizplus · Accepted Answer

In order to maximize profits, a firm needs to produce at the point where marginal cost equals marginal revenue. At this level of production, the firm is producing output at the lowest possible cost, which means it is also minimizing its cost of producing that output. Therefore, option A is the correct choice. B, C, D, and E may be necessary conditions for profit maximization, but they are not sufficient conditions.

A Firm That Is Maximizing Its Profits by Producing a Certain