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

Quizplus · Accepted Answer

The profit-maximizing quantity for a perfectly competitive firm is where marginal cost equals the market price. In this case, that occurs at QS1U1B13S1U1B0 bushels, where the marginal cost intersects with the horizontal line drawn from the equilibrium price. At this quantity, the firm earns a profit of (S1U1B13 - S1U0B13) x QS1U1B13, which is the shaded rectangle in the exhibit.

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