Figure 7.7 Figure 7.7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm.
-Refer to Figure 7.7.At price P₄,the firm would

Question

Figure 7.7 Figure 7.7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm. -Refer to Figure 7.7.At price P₄,the firm would

Quizplus · Accepted Answer

At price P₄, the demand curve intersects with the marginal cost curve, indicating that the firm will produce the quantity Q1, where marginal cost equals price. At this quantity, the total revenue (rectangle P0S1U1BQ1) exceeds the total cost (rectangle P0BQ1), resulting in a profit for the firm. Therefore, the best choice is (B), make a profit.

Figure 77 Figure 7