The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client.Table 9.2

-The profit of a firm is maximized when:
A)marginal revenue is maximum.
B)marginal revenue is greater than marginal cost.
C)marginal revenue is equal to marginal cost.
D)marginal cost is minimum.
E)marginal revenue is less than marginal cost.

Question

The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client.Table 9.2
 
-The profit of a firm is maximized when:
A)marginal revenue is maximum. 
B)marginal revenue is greater than marginal cost. 
C)marginal revenue is equal to marginal cost. 
D)marginal cost is minimum. 
E)marginal revenue is less than marginal cost.

Quizplus · Accepted Answer

The profit of a firm is maximized when marginal revenue is equal to marginal cost. At this point, the firm is producing the optimal level of output where the additional revenue generated by producing one more unit is equal to the additional cost incurred in producing that unit. This leads to maximum profits for the firm.

The Table Given Below Reports the Marginal Revenue and Marginal