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Figure: The Perfectly Competitive Firm II
-(Figure: The Perfectly Competitive Firm II) Look at the figure The Perfectly Competitive Firm II. If this firm's MR curve is MR₂, then this firm's optimal output is _____ units of output and its economic profit will be _____.

Question

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Figure: The Perfectly Competitive Firm II

-(Figure: The Perfectly Competitive Firm II) Look at the figure The Perfectly Competitive Firm II. If this firm's MR curve is MR₂, then this firm's optimal output is _____ units of output and its economic profit will be _____.

Quizplus · Accepted Answer

The optimal output for a perfectly competitive firm is where MR = MC. If MR is MR₂, the firm produces at Q₂. If the price (MR) is below average total cost (ATC) at this output, the firm incurs a negative economic profit.

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