Figure 6.2:
-Refer to Figure 6.2 for a perfectly competitive firm.If price is $4,the profit-maximizing rate of output is:

Question

Figure 6.2: 
-Refer to Figure 6.2 for a perfectly competitive firm.If price is $4,the profit-maximizing rate of output is:

Quizplus · Accepted Answer

To maximize profits, the firm should produce at the quantity where marginal cost (MC) equals price (P). In this case, at a price of $4, the MC curve intersects the AVC curve at a quantity of 32 units. This quantity is also equal to the minimum point of the AVC curve, indicating that the firm is able to cover all of its variable costs (and some of its fixed costs) at this output level. Therefore, the profit-maximizing rate of output is 32 units.

Figure 6.2: -Refer to Figure 6.2 for a Perfectly Competitive Firm.If Price