Exhibit 7-12 Marginal revenue and cost per unit curves If price is equal to OD for the firm shown in Exhibit 7-12, total profit is maximized when:

Question

Exhibit 7-12  Marginal revenue and cost per unit curves  If price is equal to OD for the firm shown in Exhibit 7-12, total profit is maximized when:

Quizplus · Accepted Answer

Total profit is maximized when marginal cost equals marginal revenue. At output level Z, the marginal cost and marginal revenue curves intersect, indicating that the firm is producing the quantity where it maximizes profits. At any higher level of output, marginal cost exceeds marginal revenue, resulting in a decrease in profit. Therefore, output level Z is the best choice.

Exhibit 7-12 Marginal Revenue and Cost Per Unit Curves If