Question

Maximizing profits also means that a firm is attempting to:

a) Maximize total revenue
b) Maximize total cost
c) Minimize total output
d) Minimize economic profit

Answer 1

Maximizing profits also means that a firm is attempting to maximize total revenue.

Step-by-step explanation:

A firm that is maximizing profits is attempting to maximize total revenue. In a perfectly competitive market, as a firm produces more output, its total revenue increases at a constant rate determined by the market price. Profits are highest at the quantity of output where total revenues exceed total costs by the greatest amount. Alternatively, profits are highest where marginal revenue (which is equal to price for a perfectly competitive firm) is equal to marginal cost.