Exhibit 8-12 Marginal revenue and cost per unit curves
-If price is equal to OD for the firm shown in Exhibit 8-12, total profit is maximized when:

Question

Exhibit 8-12 Marginal revenue and cost per unit curves 
-If price is equal to OD for the firm shown in Exhibit 8-12, total profit is maximized when:

Quizplus · Accepted Answer

Total profit is maximized when marginal revenue (MR) equals marginal cost (MC). At output level Z, MR intersects with MC, indicating that this is where total profit is maximized. Therefore, output level Z is the best choice for the firm to maximize profit at a price of OD.

Exhibit 8-12 Marginal Revenue and Cost Per Unit Curves