A profit-maximizing firm will produce the level of output such that
A) average revenue equals average cost.
B) average revenue equals variable cost.
C) marginal revenue equals rising marginal cost.
D) marginal cost equals rising marginal revenue.
E) marginal revenue exceeds marginal cost by the maximum amount.

Question

Quizplus · Accepted Answer

A profit-maximizing firm will always produce where marginal revenue equals marginal cost. Additionally, in the short run, rising marginal cost is equivalent to marginal cost intersecting average variable cost at its minimum point. Therefore, the answer is C where marginal revenue equals rising marginal cost.

A Profit-Maximizing Firm Will Produce the Level of Output Such