Figure 9-1

-Refer to Figure 9-1. If the firm is profit maximizing, what does the region bounded by DAEF represent?
A) total consumer surplus
B) total costs
C) total losses
D) total profits

Question

Figure 9-1
 
-Refer to Figure 9-1. If the firm is profit maximizing, what does the region bounded by DAEF represent?
A) total consumer surplus 
B) total costs 
C) total losses 
D) total profits

Quizplus · Accepted Answer

The region bounded by DAEF represents total revenue, and since the firm is profit maximizing, it will produce where marginal revenue equals marginal cost (point E). At this point, the firm will have total revenue equal to the area bounded by DAEF and total costs equal to the area bounded by CBGE. Therefore, the region bounded by DAEF minus the region bounded by CBGE represents total profits.

Figure 9-1 -Refer to Figure 9-1. If the Firm Is Profit Maximizing