Exhibit 7-12 Marginal revenue and cost per unit curves The firm shown in Exhibit 7-12 will:

Question

Exhibit 7-12  Marginal revenue and cost per unit curves  The firm shown in Exhibit 7-12 will:

Quizplus · Accepted Answer

The firm will produce where marginal cost equals marginal revenue to maximize profits. Since the firm is not large enough to affect the market price, it is a price taker and can only sell at the market price. The firm will not produce below a price of OA because that price is below the average variable cost, meaning the firm would lose money on each unit produced. Therefore, all of the above choices are correct.

Exhibit 7-12 Marginal Revenue and Cost Per Unit Curves the Firm