Exhibit 7-13 Price and cost per unit curves

In Exhibit 7-13, if the price is P₃, total economic profit is maximized or economic loss minimized at the output:

Question

Exhibit 7-13 Price and cost per unit curves In Exhibit 7-13, if the price is P₃, total economic profit is maximized or economic loss minimized at the output:

Quizplus · Accepted Answer

To maximize total economic profit or minimize economic loss, the output level should be where marginal revenue (MR) equals marginal cost (MC). In Exhibit 7-13, the MR curve intersects the MC curve at Q₃. This means that producing and selling Q₃ units will result in the highest total economic profit, or the lowest economic loss, for the firm. Therefore, the correct answer is C) Q₃.

Exhibit 7-13 Price and Cost Per Unit Curves