Respuesta :
Each individual firm will maximize its profits or minimize losses by hiring a specific type of labor up to the point where the marginal revenue product is Equal to marginal cost.
Why does profit increase if MR = MC?
The biggest difference between total revenue and total cost is reached at production levels where MR = MC, which serves as our definition of producer's equilibrium and promotes profit maximization. Therefore, MC MR is a prerequisite for a scenario with sustained profit. The additional money that results from raising the quantity is known as the marginal revenue. The additional revenue "at the margin" is another name for this. Profit is therefore maximized when marginal cost equals marginal revenue, or when marginal profit is equal to zero. Profit depends on the equation profit = Total revenue - Total cost. As a result, a company optimizes profit when the first order, MR = MC, and the second order depend on the first order.
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