The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 23.3 Refer to Figure 23.3 and calculate the firm's total revenue at the profit maximizing level of output.

Question

The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 23.3  Refer to Figure 23.3 and calculate the firm's total revenue at the profit maximizing level of output.

Quizplus · Accepted Answer

To find the profit maximizing level of output, we need to find where marginal revenue (MR) equals marginal cost (MC), which is at an output of 8. At this level of output, the price will be $24. The total revenue can be calculated by multiplying the price by the quantity, which gives us $24 x 8 = $192. However, we also need to take into account the fixed cost of $4, which brings our total revenue to $196 (option C).

The Figure Given Below Shows the Revenue and the Cost