Industry profits are maximized in the figure below: A) only at point Q^M₁. B) only at point Q^M₂. C) on the line segment joining points Q^M₁ and Q^M₂. D) at the point where r₁ = r₂.

Question

Quizplus · Accepted Answer

Industry profits are maximized where marginal revenue (MR) equals marginal cost (MC), which is where the profit-maximizing quantity is produced (Q). This occurs at the intersection of the marginal revenue and marginal cost curves. In the given figure, the point where MR intersects MC is Q, and it lies on the line segment joining points Q^M₁ and Q^M₂. Therefore, industry profits are maximized on this line segment only.

Industry Profits Are Maximized in the Figure Below