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At the optimal production level (maximum profit), in marginal analysis:
AMarginal cost = total cost (equal totals)
BMarginal revenue = 0 (no extra revenue)
CMarginal revenue = marginal cost (MR = MC)
DMarginal cost is minimised (smallest cost)
Answer & Solution
Correct answer: C. Marginal revenue = marginal cost (MR = MC)
Profit P = R − C. dP/dq = MR − MC. Setting dP/dq = 0 (for max) gives MR = MC. This is the classical condition for profit maximisation in economics.
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