Which panel in the figure below most accurately indicates by q* the level of output which a single supplier in a perfectly competitive industry will produce, given it produces a positive amount?
A)a
B)b
C)c
D)d

Question

Which panel in the figure below most accurately indicates by q* the level of output which a single supplier in a perfectly competitive industry will produce, given it produces a positive amount? 
A)a 
B)b 
C)c 
D)d

Quizplus · Accepted Answer

Panel (B) shows that at the intersection of marginal cost and marginal revenue, a perfectly competitive firm will produce the quantity q* given that it produces a positive amount. At this point, the firm is producing at minimum average total cost and making zero economic profit. This is the profit-maximizing level of output for a perfectly competitive firm in the short-run.

Which Panel in the Figure Below Most Accurately Indicates by Q