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The level of output of a firm where the
Any firm always works towards achieving its objective of profit maximization and a firm maximizes its profit by producing at an output level where the marginal revenue of the firm becomes equal to the marginal cost of the firm. At the profit-maximizing output level, the difference between the firm's total revenue and total cost becomes maximum.
The total revenue of the firm is the amount in monetary terms a firm is able to generate by producing and selling a given level of output in the market at some particular market price and the marginal revenue is defined as the extra revenue a firm is able to generate by producing and selling one more unit of output in the market. The total cost of production is the amount in monetary terms a firm incurs in the production of its output on the other hand the marginal cost of production is defined as the extra cost a firm is required to incur when it produces one more unit of output.
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