The correct answer is A. MC = MR.
In the short run, a firm’s profits are maximized when marginal revenue equals marginal cost. This is because at this point, the firm is producing the quantity of output where the additional revenue from selling one more unit of output is equal to the additional cost of producing that unit of output. As a result, the firm is not producing too much or too little output, and its profits are maximized.
Option B is incorrect because marginal revenue is equal to zero when the firm is producing at its maximum output level. At this point, the firm is not able to increase its profits by producing more output, and its profits are maximized.
Option C is incorrect because marginal revenue is negative when the firm is producing at an output level where the demand for its product is decreasing. At this point, the firm is losing money by producing more output, and its profits are minimized.
Option D is incorrect because marginal cost is equal to zero when the firm is producing at its minimum efficient scale. At this point, the firm is producing the quantity of output where its costs are minimized, but its profits may not be maximized.