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

Choose 1 answer:
(A) $Q_{2} ; P_{2}$
(B) $Q_{1} ; P_{4}$
(C) $Q_{2} ; P_{3}$
(D) $Q_{1} ; P_{2}$
(E) $Q_{1} ; P_{1}$
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Question

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

Choose 1 answer:
(A) $Q_{2} ; P_{2}$
(B) $Q_{1} ; P_{4}$
(C) $Q_{2} ; P_{3}$
(D) $Q_{1} ; P_{2}$
(E) $Q_{1} ; P_{1}$
Report a problem

Accepted Answer

∻Solution∻ ‖ a ⋮ 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 $Q_2$. ‖ ‖ b ⋮ Determine the price: In a perfectly competitive market, the price is determined by the market demand curve (D). At the quantity $Q_2$, the corresponding price on the demand curve is $P_3$. ‖ ∻Answer∻ ⚹ (C) $Q_{2} ; P_{3}$ ⚹ ∻Key Concept∻ ⚹ Profit Maximization in Perfect Competition ⚹ ∻Explanation∻ ⚹ 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. ⚹◊What is the relationship between the marginal cost (MC) and the marginal revenue (MR) in this scenario?⍭ Generate me a similar question◊

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