This graph represents the cost and revenue curves of a firm in a perfectly competitive market. According to the graph shown,if a firm is producing at Q2:

Question

This graph represents the cost and revenue curves of a firm in a perfectly competitive market.  According to the graph shown,if a firm is producing at Q2:

Quizplus · Accepted Answer

At Q2, the firm is producing where marginal revenue (MR) equals marginal cost (MC). This means that the firm is maximizing profits because it is producing the quantity of output where the additional revenue generated by producing one more unit of output (MR) equals the additional cost of producing that one more unit of output (MC). At the same time, the firm is also producing at an efficient scale because it is producing where average total cost (ATC) is minimized. Therefore, all of these statements are true.

This Graph Represents the Cost and Revenue Curves of a Firm