how many units of output should this firm produce to maximize profits? (dont forget the thousands.)
how many units of output should this firm produce to maximize profits? (dont forget the thousands.)
Answer
Explanation:
Step1: Recall profit - maximization rule
A firm maximizes profit when Marginal Revenue (MR) equals Marginal Cost (MC). In the given graph, we need to find the quantity where the MR (which is equal to the price line in perfect - competition) intersects the MC curve.
Step2: Locate intersection on graph
Looking at the lower graph, the price line (which represents MR in this case) intersects the MC curve at a quantity of 100 (in thousands).
Answer:
100,000 units