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Why do firms maximise profit when marginal cost is rising?

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Question ajoutée par tanaka matemadanda
Date de publication: 2017/04/24

Because to maximize profit you keep on selling until marginal cost equals marginal income(MC=MR)

Some Key points

  • MC is the increase in total cost from producing one additional unit.
  • The MR is the increase in revenue from the sale of one additional unit.
  • One way to determine how to generate the largest profit is to use the marginal revenue-marginal cost perspective. This strategy is based on the fact that the total profit reaches its maximum point where marginal revenue equals marginal profit.