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Posted 2 months ago

For the graph shown here, what quantity will this firm produce and what price will it charge?

Choose 1 answer:
(A) Q2;P2Q_{2} ; P_{2}
(B) Q1;P4Q_{1} ; P_{4}
(C) Q2;P3Q_{2} ; P_{3}
(D) Q1;P2Q_{1} ; P_{2}
(E) Q1;P1Q_{1} ; P_{1}
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Answer from Sia
Posted 2 months ago
Identify the profit-maximizing quantity: In a perfectly competitive market, firms maximize profit where Marginal Cost (MC) equals Marginal Revenue (MR). From the graph, the intersection of the MC and MR curves occurs at the quantity Q2Q_2
Determine the price: In a perfectly competitive market, the price is determined by the market demand curve (D). At the quantity Q2Q_2, the corresponding price on the demand curve is P3P_3
(C) Q2;P3Q_{2} ; P_{3}
Key Concept
Profit Maximization in Perfect Competition
In a perfectly competitive market, firms produce where MC equals MR to maximize profit. The price is determined by the demand curve at this quantity.

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