The highest point on the total profit curve with the greatest vertical separation between the total revenue curve and total cost curve will be chosen by a management who wants to maximize profits.
A manager maximizes profit when the value of the final unit of production (marginal revenue) equals the cost of producing the final unit of production (marginal cost).
To maximize profitability, the corporation should set marginal revenue at parity with marginal cost. Due to market competition, this corporation must pay a market price that is equivalent to its marginal revenue.
To maximize profits, one must determine the ideal output level where a perfectly competitive firm's Marginal Cost (MC) Equals Market Price (P). The profit-maximization point is where MC crosses with MR or P.
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