Figure 9-19

-Refer to Figure 9-19.At the profit-maximizing level of output,the firm will earn an economic
A)profit of AHEB.
B)loss of AGDC.
C)loss of AHEB.
D)loss of AIFB.

Question

Figure 9-19
 
-Refer to Figure 9-19.At the profit-maximizing level of output,the firm will earn an economic
A)profit of AHEB. 
B)loss of AGDC. 
C)loss of AHEB. 
D)loss of AIFB.

Quizplus · Accepted Answer

At the profit-maximizing level of output, the marginal revenue (MR) equals the marginal cost (MC) of production, which is at point E on the graph. At this level of output, the price (P) is lower than the average total cost (ATC), resulting in a loss. So, the firm will earn an economic loss of AHEB.

Figure 9-19 -Refer to Figure 9-19.At the Profit-Maximizing Level of Output,the Firm