The profit-maximizing rule of mr=mc states that in the short run, the firm will maximize profit or minimize loss by producing the output for which marginal revenue ______ marginal cost.

Respuesta :

The profit-maximizing rule of mr=mc states that in the short run, the firm will maximize profit or minimize loss by producing the output for which marginal revenue is equal to marginal cost.

The marginal cost of production and marginal revenue both are those economic measures which are  used to determine the amount of output  to be produced and the price per unit of a product that will maximize profits.

A rational company always seeks to get as much profit as it can, and the marginal revenue and the marginal cost of production relation  helps them to identify the level at which the maximum profit occurs to them. In this case, the target is for marginal revenue to equal marginal cost

When marginal revenue will be less than the marginal cost of production, it will mean that  a company is producing too much and should decrease its production until marginal revenue equals the marginal cost of production. On the other hand, when the marginal revenue is greater than the marginal cost, then the company is not producing enough quantity of goods and should increase its output until profit is maximized.

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