Use the following to answer question:
-(Figure: The Perfectly Competitive Firm II) Use Figure: The Perfectly Competitive Firm II.If this firm's MR curve is MR₁,the firm will maximize profit by producing _____ units of output,and its economic profit will be _____.

Question

Use the following to answer question:

-(Figure: The Perfectly Competitive Firm II) Use Figure: The Perfectly Competitive Firm II.If this firm's MR curve is MR₁,the firm will maximize profit by producing _____ units of output,and its economic profit will be _____.

Quizplus · Accepted Answer

The profit maximizing output for this firm is where MR=MC, which is Q₃. At this output level, the price (which is also equal to MR) is above the average total cost, resulting in positive economic profit. Therefore, the correct answer is option C.

Use the Following to Answer Question