Asked by Mahmood Alfayoumi on May 31, 2024
Verified
Which statement is TRUE?
A) Profit-maximizing behavior occurs only in perfectly competitive markets.
B) Additional units of a good should be produced as long as MR < MC.
C) The profit-maximizing solution occurs where MR = MC.
D) The profit-maximizing solution occurs where MR > MC.
Profit-Maximizing
The process or strategy of adjusting production and pricing to achieve the highest possible profit.
MR = MC
A condition where the marginal revenue (MR) equals marginal cost (MC), which is the profit maximizing level of output for a firm under perfect competition.
- Learn about the strategy for maximizing profits within monopolistic markets (MR=MC) and its practical implications.
Verified Answer
JW
Jeremy WatsonJun 05, 2024
Final Answer :
C
Explanation :
Profit-maximizing behavior occurs in all types of markets, but the profit-maximizing solution occurs where MR = MC. This is because at this point, the firm is producing the level of output where the additional revenue earned from producing one more unit (MR) is exactly equal to the additional cost of producing one more unit (MC). Therefore, the firm cannot increase profits by producing more or less than this level of output.
Learning Objectives
- Learn about the strategy for maximizing profits within monopolistic markets (MR=MC) and its practical implications.
Related questions
In the Long Run, a Pure Monopolist Will Maximize Profits ...
If a Monopolistically Competitive Firm Is Producing the Profit-Maximizing Level ...
Which Statement Is TRUE ...
(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in ...
A Certain Monopolist Has a Positive Marginal Cost of Production ...