Respuesta :
Quantity 2 of Output does the Profit-Maximizing Where Marginal cost is equal to Marginal revenue (or loss minimizing) firm produce.
Because the decision that will maximize profits for a perfectly competitive firm will be made at the output level where marginal cost equals marginal revenue, or MC = MR.
The line that both MC and MR commit to originates from different axes but lies in the same quantity is depicted in the figure above. The maximization of profits in this case requires achieving the output level where price = MR = MC.
The relationship between marginal revenue and the marginal cost of production aids in determining the point at which a rational business seeks to squeeze out as much profit as it can. When it comes to this situation, the goal is for marginal revenue to equal marginal cost.
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Complete question:
Refer to Exhibit 22-2. What quantity of output does the profit-maximizing (or loss-minimizing) firm produce?
a. Q1, where marginal cost is less than marginal revenue.
b. Q3, where marginal cost is greater than marginal revenue.
c. Q2, where marginal cost is equal to marginal revenue.
d. Q4, which maximizes the difference between marginal cost and
marginal revenue.
