At the profit-maximizing level of output

a. marginal revenue equals average total cost.
b. marginal revenue equals average variable cost.
c. marginal revenue equals marginal cost.
d. average revenue equals average total cost.

The correct answer is letter "C": marginal revenue equals marginal cost.

Explanation:

The profit-maximizing level of output for every type of firm is reached when the marginal revenue of production equals the marginal cost meaning that the additional cost of selling one more unit equals the cost of producing one more unit.

Marginal costs vary according to changes in production. Because of that, managers must identify when those events happen to calculate the profit margin (percentage sales that are converted into profits) of the firm to avoid losses.

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