DQ6 - because the costs exceed the revenue generated by the...

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DQ6 A firm will produce until its profits are maximized. Simply maximizing total revenue is insufficient, because total revenue does not take costs into account. Instead, a firm tries to maximize the difference between total revenue and total cost. Thus, a firm will produce until its marginal cost is equal to its marginal revenue. At this point, the production of any additional units will result in a net loss
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Unformatted text preview: because the costs exceed the revenue generated by the selling of that extra unit. If MR is greater than MC, more units could be produced that would create additional revenue since the revenue generated by one more unit is higher than the costs. When MC equals MR the profit is maximized, any change in production will result in a loss of revenue....
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