A good marketing manager for a producer knows that the most profitable price and level of output:
A) is where the positive difference between the total revenue and total cost curves is the greatest.
B) is where the firm's profit is the same as that of its competitors.
C) is where total revenue equals total cost.
D) is where total profit equals total cost.
E) None of these alternatives is correct.

Question

Quizplus · Accepted Answer

The most profitable price and level of output for a producer is where the positive difference between total revenue and total cost curves is the greatest. This is because at this point, the producer is maximizing their profit. If they produce any less, they will not be making as much profit as they could be. If they produce any more, the cost of producing those additional units will be greater than the revenue generated from selling them, resulting in a lower profit. Therefore, the producer should aim to produce at the point where the positive difference between total revenue and total cost curves is the greatest.

A Good Marketing Manager for a Producer Knows That the Most