Asked by Ferhat Butun on May 09, 2024
Verified
Refer to Figure 8.3.1 above. At which point or range is profit maximized?
A) Between points A and B
B) At point B
C) Between points B and C
D) At point C
Profit Maximized
Profit maximized refers to a scenario where a firm achieves the highest possible profit from its operations, where marginal costs equal marginal revenue.
- Decode the nexus between total revenue, total cost, marginal revenue, and marginal cost, focusing on their implications for maximizing profits.
- Recognize how profit maximization is reflected on graphs and tables relating to cost, revenue, and output levels.
Verified Answer
MW
Muhammad WaqasMay 10, 2024
Final Answer :
B
Explanation :
Profit is maximized at the point where MR = MC, which is point B in this figure. At this point, the firm produces Q units and charges P price, resulting in the highest possible profit.
Learning Objectives
- Decode the nexus between total revenue, total cost, marginal revenue, and marginal cost, focusing on their implications for maximizing profits.
- Recognize how profit maximization is reflected on graphs and tables relating to cost, revenue, and output levels.