Figure 9-19

-Refer to Figure 9-19.To maximize profit,the firm should produce an output level of
A)zero;the firm should shut down immediately.
B)Q₂.
C)Q₃.
D)Q₄.

Question

Figure 9-19
 
-Refer to Figure 9-19.To maximize profit,the firm should produce an output level of
A)zero;the firm should shut down immediately. 
B)Q₂. 
C)Q₃. 
D)Q₄.

Quizplus · Accepted Answer

To maximize profit, the firm should produce where marginal revenue (MR) equals marginal cost (MC). This occurs at the output level where the MC curve intersects the MR curve, which is at Q₃. At any output level below Q₃, the MR is greater than the MC, meaning the firm can increase profit by producing more. At any output level above Q₃, the MC is greater than the MR, meaning the firm can decrease profit by producing less. Therefore, the best choice is to produce Q₃.

Figure 9-19 -Refer to Figure 9-19.To Maximize Profit,the Firm Should Produce an Firm