If the profit maximization assumption holds true, then __________.

Question

average costs, total costs, and marginal costs will be evaluated by the firm to help establish the profit-maximizing level of output

a rational firm will choose the quantity of output that maximizes its loss

cost information is not relevant to the decision of how much of a good to produce

a rational firm will choose the quantity of output that minimizes its profits

Answer 1

If the profit maximization assumption holds true, then average costs, total costs, and marginal costs will be evaluated by the firm to help establish the profit-maximizing level of output.

This is because a rational firm seeks to determine the quantity of output at which marginal cost equals marginal revenue, ensuring profit is maximized. Evaluating cost information is crucial in this process.