The figure depicts a firm in a price-taker market. Use this figure to answer the following question(s).
Figure 9-19

Refer to Figure 9-19. At the profit-maximizing level of output, the firm will earn an economic
A) profit of AHEB.
B) loss of AGDC.
C) loss of AHEB.
D) loss of AIFB.

Question

The figure depicts a firm in a price-taker market. Use this figure to answer the following question(s).
Figure 9-19

Refer to Figure 9-19. At the profit-maximizing level of output, the firm will earn an economic
A) profit of AHEB. 
B) loss of AGDC. 
C) loss of AHEB. 
D) loss of AIFB.

Quizplus · Accepted Answer

At the profit-maximizing level of output, the firm produces where MR=MC, which is at point E. At this level of output, total revenue (AHEB) is less than total cost (BEC), resulting in a loss of AHEB.

The Figure Depicts a Firm in a Price-Taker Market