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The following figure shows the total cost and total revenue curves for a firm.
Figure 9-2
-Refer to Figure 9-2.The firm's profits are positive:
A)from output level 1 to 2.
B)only at output level 2.
C)from output level 2 to 4.
D)only at output level 1.

Question

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The following figure shows the total cost and total revenue curves for a firm.
Figure 9-2 
-Refer to Figure 9-2.The firm's profits are positive:
A)from output level 1 to 2. 
B)only at output level 2. 
C)from output level 2 to 4. 
D)only at output level 1.

Quizplus · Accepted Answer

The firm's profits are positive in the output range from 2 to 4, where the total revenue curve is above the total cost curve. At output level 1, the total cost curve is above the total revenue curve, indicating negative profits. At output level 2, the firm has the highest profits, but they decrease at output levels above 2 due to increasing costs. Therefore, the correct choice is (C) from output level 2 to 4.

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