Refer to the following figure:

The above graph shows the demand and cost conditions facing a price-setting firm.
-What is the maximum amount of profit the firm can earn?

Question

Refer to the following figure:
  
The above graph shows the demand and cost conditions facing a price-setting firm.
-What is the maximum amount of profit the firm can earn?

Quizplus · Accepted Answer

The best choice for the firm is to set a price of $10, which results in a quantity demanded of 15 units. At this point, the firm's marginal cost is equal to its marginal revenue, resulting in a profit of $80 ($150 in revenue - $70 in total costs). Any other price will result in a lower profit.

Refer to the Following Figure