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Exhibit: Profit Maximizing

-(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market. Curve M must cross curves N and O:

Question

Use the following to answer question(s): 
Exhibit: Profit Maximizing
 
-(Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a perfectly competitive market. Curve M must cross curves N and O:

Quizplus · Accepted Answer

In a perfectly competitive market, a firm's profit is maximized at the point where the marginal cost (curve M) equals the marginal revenue (which is equal to the market price). At this point, the firm is producing at the minimum point on its average total cost curve (curve N) and the minimum point on its average variable cost curve (curve O). Therefore, curve M must cross curves N and O at their minimum points. The answer is C.

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