Question

What is the level of output every firm strives for?

A) when fixed and marginal cost are equal
B) when variable cost and marginal cost rise at the same time
C) when marginal revenue equals marginal cost
D) when marginal revenue is greater than marginal cost

Answer 1

C) when marginal revenue equals marginal cost

Answer 2

The correct answer is option C) "when marginal revenue equals marginal cost".

Step-by-step explanation:

Every firm looks to have a high level of profit (Q), using the term of profit-maximizing level to describe the ideal condition. The first-order condition to achieve the maximum profit is to look when marginal revenue (MR) equals to the marginal cost (MC). Different outputs of MR and MC should be graphed according to the inner company data and the point at which the two curves cross is the maximum level of profit.