Question

At the​ profit-maximizing level of​ output, what is the relationship between the total revenue​ (TR) and total cost​ (TC) curves? A. They cannot be tangent to each other. B. They must have the same slope. C. They must​ intersect, with TC cutting TR from above. D. They must​ intersect, with TC cutting TR from below. E. They must be tangent to each other.

Answer 1

Answer: They must have the same slope.

Step-by-step explanation:

It should be noted that at the​ profit-maximizing level of​ output, the marginal revenue will be equal to the marginal cost.

Since the slope of the total revenue is the marginal revenue while the slope of the total cost us marginal cost, then at the​ profit-maximizing level of​ output, the relationship between the total revenue​ (TR) and total cost​ (TC) curves is that they must have the same slope.