Figure 9-9
Figure 9-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
-Refer to Figure 9-9.At price P₃,the firm would produce

Question

Figure 9-9
  Figure 9-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
-Refer to Figure 9-9.At price P₃,the firm would produce

Quizplus · Accepted Answer

At price P₃, the demand curve intersects the marginal cost curve at point E. The corresponding quantity produced is Q₃. Any other quantity produced, such as Q₂, would result in a lower profit because the marginal cost would exceed the marginal revenue. Similarly, producing Q₄ or Q₅ would result in lower profits because the marginal revenue would be less than the marginal cost. Therefore, the profit-maximizing quantity is Q₃.

Figure 9-9 Figure 9-9 Shows Cost and Demand Curves Facing