Revenue-maximizing quantity occurs at the point where

• A. The spot where MC equals MR
• B. The spot where MR hits 0
• C. The spot where price equals marginal cost
• D. The spot where total revenue is minimized

Answer: (B)

Revenue-maximizing quantity occurs where marginal revenue is zero. Marginal revenue is the extra revenue from selling one more unit. With a downward-sloping demand, the price drop on all units bought means the additional revenue from the next unit eventually falls to zero and then becomes negative. When MR is positive, adding another unit raises total revenue; when MR is negative, it lowers total revenue. The highest total revenue is reached at the quantity where MR changes sign, i.e., MR equals zero. The other conditions describe different goals or outcomes (profit maximization with MR = MC, price = MC for efficiency, or minimizing total revenue), not revenue maximization.