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

-Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:
A)equal to the profit maximizing level of output.
B)equal to revenue maximizing level of output.
C)less than the profit maximizing level of output.
D)zero.
E)greater than the profit maximizing level of output.

Question

The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client.Table 9.2
 
-Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:
A)equal to the profit maximizing level of output. 
B)equal to revenue maximizing level of output. 
C)less than the profit maximizing level of output. 
D)zero. 
E)greater than the profit maximizing level of output.

Quizplus · Accepted Answer

When marginal revenue equals marginal cost, the firm is producing at the point where the additional revenue from producing one more unit is equal to the additional cost of producing that unit. This is the point where the firm is maximizing its profits. Therefore, the firm is producing at the profit maximizing level of output.

The Table Given Below Reports the Marginal Revenue and Marginal