Figure 12-6
Figure 12-6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
-Refer to Figure 12-6.At price P₄,the firm would produce

Question

Figure 12-6 Figure 12-6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-6.At price P₄,the firm would produce

Quizplus · Accepted Answer

At the price of P₄, the demand curve intersects with the marginal cost curve at point A, which indicates that the firm should produce the quantity corresponding to Q₄. This is because producing any lesser quantity would mean not maximizing profits, and producing any larger quantity would mean incurring a higher cost than revenue earned from selling the output. Thus, the best choice for the firm is to produce Q₄ units.

Figure 12-6 Figure 12-6 Shows Cost and Demand Curves Facing a Curves