Exhibit 7-11 A firm's cost and marginal revenue curves In Exhibit 7-11, when the price rises from $5 to $8, the profit-maximizing (or loss-minimizing) firm goes from making a:

Question

Exhibit 7-11  A firm's cost and marginal revenue curves  In Exhibit 7-11, when the price rises from $5 to $8, the profit-maximizing (or loss-minimizing) firm goes from making a:

Quizplus · Accepted Answer

When the price rises from $5 to $8, the cost curve remains the same. But the marginal revenue curve increases, and at $8, it intersects with the marginal cost curve at the firm's output level. At this output level, the firm is able to cover its variable costs and make a positive contribution towards fixed costs, resulting in a profit. Therefore, the firm goes from making a loss to making a profit.

Exhibit 7-11 a Firm's Cost and Marginal Revenue Curves in Exhibit