Use the figure to answer the following question(s).
Figure 10-5

Given the cost and demand conditions depicted in Figure 10-5 for the competitive price-searcher firm, what is the price that the firm should charge if it wants to maximize its profit?

Question

Use the figure to answer the following question(s).
Figure 10-5

Given the cost and demand conditions depicted in Figure 10-5 for the competitive price-searcher firm, what is the price that the firm should charge if it wants to maximize its profit?

Quizplus · Accepted Answer

The profit-maximizing price for a competitive price-searcher firm is at the point where marginal revenue (MR) equals marginal cost (MC). In the given graph, this occurs at a quantity of 30, where the MR curve intersects with the MC curve. At this quantity, the corresponding price is $40, which is the price that the firm should charge to maximize its profit.

Use the Figure to Answer the Following Question(s)