A firm's total profit is generally at a maximum when the firm's total revenue curve is above its total cost curve and the vertical distance that separates the two curves is at a maximum.

Question

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Total profit is calculated as total revenue minus total costs. Therefore, profit is maximized when the vertical distance between the total revenue curve and the total cost curve is at its greatest, indicating the largest difference between revenue and costs.

A Firm's Total Profit Is Generally at a Maximum When