Figure 14-5

-Refer to Figure 14-5.When market price is P5,which area represents a profit-maximizing firm's profits

Question

Figure 14-5
 
-Refer to Figure 14-5.When market price is P5,which area represents a profit-maximizing firm's profits

Quizplus · Accepted Answer

When the market price is P5, the profit-maximizing firm will produce where marginal cost equals marginal revenue, which is at point Q3. The area that represents the firm's profit is the rectangle with sides (P5 - P4) and Q3, so the correct answer is (P5 - P4) × Q3. Therefore, the correct choice is C.

Figure 14-5 -Refer to Figure 14-5.When Market Price Is P5,which Area Represents