According to Marginal Principle, level should be chosen where: a) MB = MC

According to Marginal Principle, level should be chosen where a) MB = MC.

A firm will continue to produce outputs until it reaches maximum profit. It will continue producing until the marginal benefit (MB) is equal to the marginal (cost). When marginal benefit is greater than the marginal cost, the firm should continue to produce goods because it can earn more revenue. When marginal cost exceeds the marginal benefit, the firm will incur losses as the cost of producing one more units is greater than the benefit received.