Use the following figure to answer the question : Figure 9-2 : shows the total cost and total revenue curves for a firm.

-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

Use the following figure to answer the question : Figure 9-2 : shows the total cost and total revenue curves for a firm.

-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 when the total revenue curve (TR) is above the total cost curve (TC), which is the case in the output level range of 2 to 4. At output level 1, the total revenue is lower than the total cost, resulting in negative profits. At output level 2, the firm reaches its maximum profit level, where the difference between TR and TC is the highest. No profits are earned at output levels 4 and above, as the total cost exceeds the total revenue. Therefore, the correct answer is C.

Use the Following Figure to Answer the Question : Figure