Why is MC=MR at the profit maximizing level of output?

MC stands for marginal (extra) cost incurred by a firm when its production raises by one unit. MR stands for marginal (extra) revenue a firm receives from producing one extra unit of output. As a firm is trying to maximise its profits, it needs to consider what happens when it changes its production by one unit. The firm will of course incur an extra cost from producing an extra unit, but will also receive revenue from that unit. If the marginal cost is bigger than the marginal revenue obtained, then the firm should realise that producing an extra unit of output was not profitable. The firm should thus cut down some of its production. If the marginal cost is smaller than the marginal revenue, then it is profitable for the firm to produce an extra unit of output. The firm should continue to raise produce extra units of output as long as the marginal revenue it receives from that unit exceeds the marginal cost. The firm should continue doing this until MC=MR, a point at which they should keep production constant, because producing an extra unit beyong this point creates a higher marginal cost for the firm that it creates marginal revenue. 

Cassandra Cristiana I. GCSE Maths tutor, GCSE French tutor, IB Econom...

2 years ago

Answered by Cassandra Cristiana, a GCSE Maths tutor with MyTutor

Still stuck? Get one-to-one help from a personally interviewed subject specialist


£24 /hr

Chandni P.

Degree: Discrete Mathematics (Bachelors) - Warwick University

Subjects offered: Maths, Further Mathematics

Further Mathematics

“Hi I'm a first year Discrete Maths student at University of Warwick and have tutored Maths for over a year! Whether it's exam prep or even just a few questions from homework sheets you might need help with, I'm happy to assist :)”

£18 /hr

Ruth W.

Degree: Biochemistry (Masters) - Birmingham University

Subjects offered: Maths, Science+ 3 more


“About Me: I am a biochemistry student at the University of Birmingham.  I have always had a real passion and love for all things science and maths and I hope that my tutorials will instil this love in you too. I’m very patient and fr...”

MyTutor guarantee

£18 /hr

Peter W.

Degree: Chemistry (Masters) - Durham University

Subjects offered: Maths, Chemistry


“Hello! Thank you so much for taking the time to read my profile. I hope that either my passion or strong tutoring ability will encourage you to drop me a message so that we can get started with your lessons. About me: I am a fourth ...”

About the author

Cassandra Cristiana I.

Currently unavailable: for regular students

Degree: Economics (Bachelors) - Warwick University

Subjects offered: Maths, French+ 1 more


“Hello, I am Cassandra and I study Economics at The University of Warwick. I can help you with GCSE Maths and French, but also with IB Maths, French, and Economics. ”

You may also like...

Posts by Cassandra Cristiana

Difference between horizontal and vertical translations of graphs

Leur or leurs?

What is the difference between a COD and a COI?

What is the difference between independent and mutually-exclusive events?

Other GCSE Maths questions

Insert one pair of brackets so that this calculation is correct; 3 x 6 + 5 - 1 = 32

How do you work out the area of a triangle?

Mark has a voucher that gives him 22% off the prices at a hardware store. Estimate how much he will pay for an electric drill that normally costs £87.99. (non-calculator) (3)

How to use trigonometry to find angles or lengths

View GCSE Maths tutors


We use cookies to improve our service. By continuing to use this website, we'll assume that you're OK with this. Dismiss