The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the
A)output-maximizing rule.
B)profit-maximizing rule.
C)shut-down rule.
D)break-even rule.

Question

Quizplus · Accepted Answer

The profit-maximizing rule states that a firm should continue producing additional units as long as the revenue from selling an extra unit (marginal revenue) is greater than or equal to the cost of producing that extra unit (marginal cost). This principle ensures that the firm maximizes its profit.

The Principle That a Firm Should Produce Up to the Point