Figure 14-5
-Refer to Figure 14-5.When market price is P3,a profit-maximizing firm's total costs

Question

Figure 14-5 
-Refer to Figure 14-5.When market price is P3,a profit-maximizing firm's total costs

Quizplus · Accepted Answer

When the market price is P3, the profit-maximizing firm produces the quantity Q2, at which marginal revenue equals marginal cost. The firm's total costs are represented by the area P3Q2. Option A is incorrect because P2Q2 represents the fixed costs. Option C is incorrect because (P3-P2)Q3 represents the difference in variable costs between two different levels of output. Option D is incorrect because the firm incurs non-zero variable costs to produce the output.

Figure 14-5 -Refer to Figure 14-5.When Market Price Is P3,a Profit-Maximizing Firm's