Figure 10-3

-In Figure 10-3, the profit maximizing firm will operate at a level of

Question

Figure 10-3
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-In Figure 10-3, the profit maximizing firm will operate at a level of

Quizplus · Accepted Answer

The profit maximizing firm will operate at the level where marginal revenue (MR) equals marginal cost (MC). In Figure 10-3, the intersection of the MC and MR curves occurs at point OI. Therefore, the firm will operate at this level to maximize profits. Operating at any other level would mean that the firm is either producing below or above the level of output that generates maximum profit.

Figure 10-3 ​

Figure 10-3