A firm maximizes total profit when
A) Total costs exceed total revenue by the largest amount.
B) Total revenues are maximized.
C) Marginal costs are greater than marginal revenues.
D) Total revenue exceeds total cost by the greatest amount.

Question

Quizplus · Accepted Answer

Total profit is maximized when the difference between total revenue and total cost is the greatest. This is because profit is calculated as total revenue minus total cost. Therefore, when total revenue exceeds total cost by the greatest amount, the firm is generating the highest profit possible.

A Firm Maximizes Total Profit When