Exhibit 8-9 At the profit-maximizing output level, the firm represented in Exhibit 8-9 experiences

Question

Exhibit 8-9  At the profit-maximizing output level, the firm represented in Exhibit 8-9 experiences

Quizplus · Accepted Answer

At the profit-maximizing output level, the firm is producing where MR=MC which is at a quantity of 50. At this output level, the price is $40 and the average total cost (ATC) is $32. Therefore, the firm's profit per unit is $8 ($40-$32) and its total profit is $8 x 50 units = $400. So, the firm experiences a profit of $1,200 ($400 x 3) since it produces three times the profit-maximizing output level.

Exhibit 8-9 at the Profit-Maximizing Output Level, the Firm