-In Figure 24.2,the profit-maximizing level of output is
A)Between 2 and 3 units.
B)Between 4 and 5 units.
C)4 units.

Question

-In Figure 24.2,the profit-maximizing level of output is
A)Between 2 and 3 units. 
B)Between 4 and 5 units. 
C)4 units.

Quizplus · Accepted Answer

The profit-maximizing level of output is where marginal revenue equals marginal cost. In Figure 24.2, the marginal revenue is equal to the demand curve, which is a straight line with a slope of -2. The marginal cost curve is given by MC = 0.5Q. The point where MR = MC is where the demand curve intersects the marginal cost curve, which happens at Q = 4. Therefore, the profit-maximizing level of output is 4 units.

-In Figure 24.2,the Profit-Maximizing Level of Output Is