All Firms Should Produce at MR=MC In economics, the point of profit maximizing and loss minimizing is called MR=MC. This point is where marginal revenue equals marginal cost, meaning that cost does not exceed revenue and revenue does not exceed cost. This is a profit-maximizing zone, meaning that total cost is not the lowest, but is farthest away from the total returns. The optimal point of production for the firm is at the …
showed first 75 words of 687 total

showed last 75 words of 687 total
…would drop. As the change in total revenue changes, so does the cost of production. The optimal point of production is when both of these are equal to each other. The graphs attached show how profit is still being made on other points of the curve, but MR=MC is the greatest. If a firm wants to increase revenue and profit, the best bet is to produce where marginal return is equal to marginal cost.