The figure above shows the demand and cost conditions for a firm with two plants.In order to maximize profit,how many units of output should the firm produce?

Question

Quizplus · Accepted Answer

The profit maximizing output level for the firm is where Marginal Revenue (MR) equals Marginal Cost (MC). In this case, we can see from the graph that the MR curve intersects with the MC curve at an output level of 30. Therefore, the firm should produce 30 units of output to maximize profit. At this level of output, the firm's profit will be the difference between the total revenue generated (30 units sold at a price of $30 per unit = $900) and the total cost incurred (30 units produced at a total cost of $550 = $350 in profit).

The Figure Above Shows the Demand and Cost Conditions for a Firm