A student guesses the quantity at which a firm maximizes profits looking at the graph below: “I think that the firm maximizes profits by either producing A or C, because the price is equal to the marginal cost.
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Get it written →Output decision under perfect competition (MM: 10)
A student guesses the quantity at which a firm maximizes profits looking at the graph below: “I think that the firm maximizes profits by either producing A or C, because the price is equal to the marginal cost. It would also be profitable to produce B, because the marginal cost at B is equal to the average total cost. It would make zero profit by producing D, because the price is equal to the average total cost.” Is the student right?
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