Figure 10.4

Figure 10.4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 10.4.If the market price is $30, the firm's profit-maximizing output level is

Question

Figure 10.4
  
Figure 10.4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 10.4.If the market price is $30, the firm's profit-maximizing output level is

Quizplus · Accepted Answer

At a price of $30, the firm can sell all 180 units it produces. To maximize profit, the firm will choose the output level where marginal cost (MC) equals marginal revenue (MR). In Figure 10.4, this occurs at an output level of 180 units, where MC intersects MR at a point on the supply curve. At this output level, the firm's total cost is $2,700 and its total revenue is $5,400, yielding a profit of $2,700. At any output level below or above 180 units, the firm's profit will be less than $2,700. Therefore, the profit-maximizing output level is 180 units.

Figure 10.4 Figure 10.4 Shows the Cost and Demand Curves for a and Demand