Exhibit 8-19 A Single Firm in a Perfectly Competitive Market
-Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm. If P₃represents the equilibrium market price. What is the profit-maximizing quantity for the firm?

Question

Exhibit 8-19 A Single Firm in a Perfectly Competitive Market

-Exhibit 8-19 shows the demand and cost situation facing a single perfectly competitive firm. If P₃represents the equilibrium market price. What is the profit-maximizing quantity for the firm?

Quizplus · Accepted Answer

The profit-maximizing quantity for the firm is where marginal cost equals marginal revenue, which occurs at the quantity where the firm's MC curve intersects the market price ($10 in this case). This occurs at a quantity of Q₃ bushels. At any quantity lower or higher than this, the firm's profit would not be maximized.

Exhibit 8-19 a Single Firm in a Perfectly Competitive Market