Figure 12-5

Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 12-5.If the market price is $20, what is the firm's profit-maximizing output?

Question

Figure 12-5
  
Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 12-5.If the market price is $20, what is the firm's profit-maximizing output?

Quizplus · Accepted Answer

The profit-maximizing output occurs where marginal cost (MC) equals price (P), which is at 1,350 units. At this level of output, the firm is able to produce and sell output at a price that covers all of its costs and generates a positive economic profit.

Figure 12-5 Figure 12-5 Shows Cost and Demand Curves Facing a Typical