(Figure: The Profit-Maximizing Output and Price) Use Figure: TheProfit-Maximizing Output and Price. Assume that there...

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Price, cost, marginal revenue of diamond $1,000 800 600 400 200 смс -200 -400 8 MR 10 16 20 Quantity of diamonds

(Figure: The Profit-Maximizing Output and Price) Use Figure: The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. At the profit-maximizing output and price for a perfectly competitive industry, economic profit for the firms in the industry is:

$200.

$1,600.

$3,200.

$0.

business economics

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Answer 1

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Answer #1

Solution: $1600

Working: The profit-maximizing output and price is where MR = MC; thus the output is $8 and price $200. Any amount above is the economic profit thus outpput will be (600 * 400) * $8 price = $1600

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Answer 2

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