Homework SourseWhich of the following is NOT true about profit maximization
Which of the following is NOT true about profit maximization for a firm?
Profit maximization occurs where marginal revenue equals marginal cost.
Profit maximization occurs where the profit per unit of the last unit produced is close to and just equal to zero.
Profit maximization occurs where the marginal revenue product of an input equals the marginal cost of employing or using that input.
Profit maximization occurs where output is restricted below the point where the marginal social benefit of the last unit of production is just equal to the marginal social cost of making that unit.
| A. | Profit maximization occurs where marginal revenue equals marginal cost. | |
| B. | Profit maximization occurs where the profit per unit of the last unit produced is close to and just equal to zero. | |
| C. | Profit maximization occurs where the marginal revenue product of an input equals the marginal cost of employing or using that input. | |
| D. | Profit maximization occurs where output is restricted below the point where the marginal social benefit of the last unit of production is just equal to the marginal social cost of making that unit. |
Solution
Option (C) is incorrect.
For profit maximization, MRP of input does not need to equal its MC.
