Refer to the figure below. If this firm is a price taker, then when the price of each unit of output is $30, this firm's total revenue at its profit-maximizing level of output is ______.

Question

Quizplus · Accepted Answer

At the profit maximizing quantity, the marginal revenue (MR) equals marginal cost (MC) which is at output level Q*=40. At this level of output, the price is $30 per unit, and the firm's total revenue is price times quantity, which is $30 x 40 = $1,200. Therefore, the firm's total revenue at its profit-maximizing level of output is $1,200 x 2 because the graph shows two units per output, which equals $2,400.

Refer to the Figure Below