Economics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 3

FIGURE 10.3 Short-run profit maximization for a purely competitive firm. The MR = MC output enables the purely competitive firm to maximize profits or to minimize In this case MR (= P in pure competition) and MC are equal at an output Q of 9 units. There, P exceeds the average total cost A = $97.78, so the firm realizes an economic profit of P ? A per unit. The total economic profit is represented by the green rectangle and is 9 × ( P ? A ).

In maximizing profits at 9 units of output, this firm is adhering to which of the foldecision rules?
A) Produce where MR exceeds MC by the greatest amount.
B) Produce where P exceeds ATC by the greatest amount.
C) Produce where total revenue exceeds total cost by the greatest amount.
D) Produce where average fixed costs are zero.