A firm with market power will maximize profit by hiring the amount of an input a

Question

A firm with market power will maximize profit by hiring the amount of an input at which the

a) last unit of the input hired adds the same amount to total revenue as to total cost.
b) additional revenue from the last unit of the input hired exceeds the additional cost of the last unit by the largest amount.
c) last unit of the input hired adds the same amount to total output as to total cost.
d) additional output from the last unit of the iput hired exceeds the additional cost of the last unit by the largest amount.

Explanation / Answer

A. We maximize profit where MC=MR.

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