Use the following to answer question:
-(Figure: Marginal Decision Rule)Use Figure: The Marginal Decision Rule.As long as the price is above the minimum variable cost,this firm should produce quantity _____,where _____ equals _____ and economic profit is maximized.

Question

Use the following to answer question: 
-(Figure: Marginal Decision Rule)Use Figure: The Marginal Decision Rule.As long as the price is above the minimum variable cost,this firm should produce quantity _____,where _____ equals _____ and economic profit is maximized.

Quizplus · Accepted Answer

The firm should produce up to the quantity where marginal cost (MC) equals price (P), which is where economic profit is maximized. As long as the price is above the minimum variable cost (MVC), the firm should produce at q₂, where MC=P. Therefore, the correct answer is B.

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