Exhibit 8-7 A firm's cost and MR curves
In Exhibit 8-7, if this firm is currently producing 20 units of
output, this firm:
Group of answer choices
A. is at its profit-maximizing point.
B. could increase profits by increasing output.
C. could increase profits by decreasing output.
D. should shut down.
E. should decrease price.
Homework Answers
Answer
Option A
A. is at its profit-maximizing point.
The profit is maximum at MR=MC if the P>AVC and here the P>ATC so P>AVC
where
Q=20
so the firm is maximizing profit.
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