Question

When will a profit-maximising firm decide that it has reached its equilibrium level of output?

Options

• When MR is greater than MC

• When MR is less than MC

• When MR is equal to MC

• When TR is equal to TC

Answer 1

When MR is equal to MC

Explanation:

At MR = MC, producing one more or one less unit would not increase profit, so the firm is in equilibrium.