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A. Profit maximization is the act of seeking
1. Total revenue = income generated by business Total cost = fixed costs + marginal costs Accounting profit from this standpoint is total revenue – the total cost = profit. Profit maximization from this standpoint is quite simply increasing your profit to as high a level as possible.
2. Marginal cost is the extra cost incurred per additional unit of product Marginal revenue is the extra revenue generated per additional unit of product
A firm looking for profit maximization from the marginal revenue to marginal cost perspective is going to find the intersecting point between marginal revenue and marginal cost. Profit maximization occurs when marginal revenue equals zero but never below.
B. Marginal revenue is the extra revenue that is added for every unit of output that is added. For Company A, marginal revenue follows a steady decrease as additional units are added.
C. Marginal cost is calculated as additional costs that are incurred for each additional unit of output that is added. For Company A, marginal cost follows a steady increase as additional units are added.
D. Company A can reach profit maximization when they produce 8 units of product. It is at this point that marginal cost and marginal revenue intersect and they are able to attain the highest level of profit.
E. If marginal revenue is greater than marginal cost then output should be increased until they are equal
F. Subsequently, if marginal cost is greater than marginal revenue then output should be decreased until they are equal

References
Campbell McConnel, Stanley Brue, Sean Flynn. (2012) Ecomonics: principles, problems, and policies. New York:

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