[amp_mcq option1=”total revenue is maximised” option2=”marginal revenue equals zero” option3=”marginal revenue equals marginal cost” option4=”marginal revenue equals average cost” correct=”option3″]<\/p>\n
The correct answer is C. marginal revenue equals marginal cost.<\/p>\n
A profit-maximizing firm in perfect competition produces where marginal revenue equals marginal cost. This is because the firm will continue to produce as long as the marginal revenue from producing an additional unit is greater than or equal to the marginal cost of producing that unit. When marginal revenue equals marginal cost, the firm is producing at the point where its profits are maximized.<\/p>\n
Option A is incorrect because total revenue is maximized when the firm produces at the point where marginal revenue is zero. However, this is not the point where profits are maximized.<\/p>\n
Option B is incorrect because marginal revenue equals zero when the firm is producing at the point of maximum output. However, this is not the point where profits are maximized.<\/p>\n
Option D is incorrect because marginal revenue equals average cost when the firm is producing at the point of break-even. However, this is not the point where profits are maximized.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”total revenue is maximised” option2=”marginal revenue equals zero” option3=”marginal revenue equals marginal cost” option4=”marginal revenue equals average cost” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-51974","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n