Figure: Profit Maximizing Output Use the figure. The profit-maximizing output for this firm is:
A) 40.
B) 3.
C) 6.
D) 9.

Question

Figure: Profit Maximizing Output  Use the figure. The profit-maximizing output for this firm is:
A) 40. 
B) 3. 
C) 6. 
D) 9.

Quizplus · Accepted Answer

The profit-maximizing output is the point where marginal revenue (MR) is equal to marginal cost (MC). In the figure, MR intersects MC at the output level of 6 units. At this output level, the firm produces and sells 6 units, which generates a profit of (P-ATC) × Q = ($8-$2) × 6 = $36. At any output level below or above 6, the firm would not be maximizing its profit. Therefore, the best choice is C) 6.

Figure: Profit Maximizing Output Use the Figure