Refer to Figure 9.3.At what quantity is the firm maximizing profit?
A) 0
B) Q1
C) Q2
D) Q3

Question

Refer to Figure 9.3.At what quantity is the firm maximizing profit? 
A) 0 
B) Q1 
C) Q2 
D) Q3

Quizplus · Accepted Answer

The firm is maximizing profit at the quantity where marginal revenue (MR) equals marginal cost (MC), which is at Q2. At any lower quantity, MC is less than MR, so the firm can increase profit by producing more. At any higher quantity, MC is greater than MR, so the firm can increase profit by producing less. Therefore, Q2 is the only quantity where the firm can maximize profit.