Use the figure below to answer the following questions.

Figure 14.2.3
-Refer to Figure 14.2.3. Assume this firm faces demand curve D₂. At the profit-maximizing output level, the firm

Question

Use the figure below to answer the following questions.
  
Figure 14.2.3
-Refer to Figure 14.2.3. Assume this firm faces demand curve D₂. At the profit-maximizing output level, the firm

Quizplus · Accepted Answer

At the profit-maximizing output level, the firm is producing where marginal cost (MC) equals marginal revenue (MR), which is at point E where the quantity is Q₂. At this level of output, the firm is making zero economic profit, as the price (P₂) is equal to the average total cost (ATC) at point F, which is also where the firm's minimum point of the U-shaped average total cost curve is located.

Use the Figure Below to Answer the Following Questions