Figure 8.4 Figure 8.4 shows the cost and demand curves for a profit-maximising firm in a perfectly competitive market.
-Refer to Figure 8.4.If the market price is $30, what is the firm's profit-maximising output level?

Question

Figure 8.4  Figure 8.4 shows the cost and demand curves for a profit-maximising firm in a perfectly competitive market.
-Refer to Figure 8.4.If the market price is $30, what is the firm's profit-maximising output level?

Quizplus · Accepted Answer

At the market price of $30, the profit-maximizing output level for the firm can be calculated by finding the quantity where marginal cost equals marginal revenue. This occurs at a quantity of 180, where the marginal cost and marginal revenue curves intersect. At this output level, the firm can produce and sell 180 units at a cost of $20 per unit, resulting in a total revenue of $5,400 (180 x $30). The total cost for producing 180 units is $3,600 (180 x $20), resulting in a profit of $1,800. This is the highest profit the firm can achieve at the given market price.

Figure 84 Figure 8