At what point are profits at their highest level?

Multiple choice question for Supply and Demand. Select an option, then review the explanation below.

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When expenses are reduced to the lowest possible amountWhen total income reaches its peakWhen the average cost is below the average revenueWhen marginal cost is equal to marginal revenueWhen fixed costs are completely eliminated

Explanation

Profit maximization occurs where marginal cost equals marginal revenue, as this balance ensures that producing one more unit neither increases nor decreases profit.

Practice related questions from the same subject.

1.What is the typical shape of a demand curve?
2.What term describes a company earning profits beyond its normal profit level?
3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
5.What are firms generally assumed to do with their costs and profits?

At what point are profits at their highest level?

Explanation

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