At the profitmaximizing output level, the firm in Exhibit 1011 is
A)earning economic profit of $400
B)earning economic profit of $200
C)earning zero economic profit
D)suffering a loss of $200
E)suffering a loss of $400

Question

At the profit­maximizing output level, the firm in Exhibit 10­11 is
A)earning economic profit of $400 
B)earning economic profit of $200 
C)earning zero economic profit 
D)suffering a loss of $200 
E)suffering a loss of $400

Quizplus · Accepted Answer

At the profit-maximizing output level, the firm is earning zero economic profit, as it is producing the quantity where marginal revenue equals marginal cost. This is represented by the point where the MC and MR curves intersect on the graph.

At the Profit­maximizing Output Level, the Firm in Exhibit 10­11

At the Profitmaximizing Output Level, the Firm in Exhibit 1011