Exhibit 7-12 Marginal revenue and cost per unit curves

-As shown in Exhibit 7-12,if the price is OD,a perfectly competitive firm maximizes profit at which point on its marginal cost curve?

Question

Exhibit 7-12 Marginal revenue and cost per unit curves
 
-As shown in Exhibit 7-12,if the price is OD,a perfectly competitive firm maximizes profit at which point on its marginal cost curve?

Quizplus · Accepted Answer

The profit-maximizing output level for a perfectly competitive firm occurs where marginal cost (MC) equals marginal revenue (MR), which is at point C in the exhibit. At this point, the firm can produce units of output and earn maximum profit, as the cost of producing additional units (MC) equals the revenue earned from selling those units (MR). Thus, the firm should produce and sell units at the level where MC is equal to MR, which is at point C in the exhibit.

Exhibit 7-12 Marginal Revenue and Cost Per Unit Curves