Figure Profit Maximization 3 At the profit-maximizing level of output in this diagram, the firm's profit is:
A) $238.
B) $10.
C) $68.
D) $77.

Question

Figure Profit Maximization 3  At the profit-maximizing level of output in this diagram, the firm's profit is:
A) $238. 
B) $10. 
C) $68. 
D) $77.

Quizplus · Accepted Answer

The profit-maximizing level of output is where Marginal Cost (MC) equals Marginal Revenue (MR), which is at output level Q2. At this level, the firm's profit is represented by the vertical distance between Total Revenue (TR) and Total Cost (TC), which is shown by the rectangle with height $238 and width 9 units, resulting in a profit of $68 ($238 - $170). Therefore, the correct answer is C) $68.

Figure Profit Maximization 3 at the Profit-Maximizing Level of Output