Figure 7-F
The figure shows the price, marginal cost, and average cost curves of a perfectly competitive firm.
-Refer to Figure 7-F.How many units of output per day should the firm produce if it wants to maximize its profits (i.e., minimize its losses)?

Question

Figure 7-F
The figure shows the price, marginal cost, and average cost curves of a perfectly competitive firm. 
-Refer to Figure 7-F.How many units of output per day should the firm produce if it wants to maximize its profits (i.e., minimize its losses)?

Quizplus · Accepted Answer

To maximize profits or minimize losses, a firm should produce at the output level where marginal cost equals marginal revenue. Typically, this occurs at a higher level of output, such as 100 units, rather than at lower levels like 30 or 70.

Figure 7-F The Figure Shows the Price, Marginal Cost, and Average Cost