Refer to Figure 23.5 for a perfectly competitive firm.This firm will maximize profits by producing the level of output that corresponds to point
A)A.
B)B.
C)C.
D)D.

Question

Refer to Figure 23.5 for a perfectly competitive firm.This firm will maximize profits by producing the level of output that corresponds to point
A)A. 
B)B. 
C)C. 
D)D.

Quizplus · Accepted Answer

The profit-maximizing firm will produce the quantity of output at which marginal cost equals marginal revenue (MC=MR). In Figure 23.5, this corresponds to point B, where the firm's marginal cost curve intersects its marginal revenue curve. At any other output level, the firm could increase profits by adjusting output until MC=MR at point B.