Hello, here's an economics querry...
For profit maximization, firms should continue producing more output until marginal revenue equals marginal cost. That’s the point where profits are maximized.
My question is, when MR=MC, marginal profit ie MR-MC=0. When marginal profit is zero, how can it be profit maximization ? ?
When mr > mc total profit increases. Beyond a certain level of units, mr < mc total profit decreases. The equilibrium is when mr = mc. This is the point when profits are maximised. In terms of time line it's first mr > mc, then mr = mc and finally mr < mc.
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