This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According the graph shown,the firm's most efficient scale of operation is to produce quantity:

Question

This graph represents the cost and revenue curves of a firm in a perfectly competitive market.  According the graph shown,the firm's most efficient scale of operation is to produce quantity:

Quizplus · Accepted Answer

The most efficient scale of operation for the firm is where marginal cost (MC) equals marginal revenue (MR), which is at quantity Q2. At this level of output, the firm can maximize its profit as it produces at the lowest possible average total cost (ATC) while still earning a positive economic profit. At quantities less than Q2, the firm's revenue exceeds its costs, whereas at quantities greater than Q2, the firm's costs exceed its revenue. Therefore, the best choice for the firm is to produce at quantity Q2.

This Graph Represents the Cost and Revenue Curves of a Firm