Prefectly comparative firm maximizing

Answers

1.C.50

2.C.40

3.C. 40

4.C. P> $45

Explanation

The geometry of profit-maximization is practiced in perfect competition where many firms sell a homogeneous good to many buyers with perfect information. The firms select each of their outputs levels to maximize their profits. The goal in maximizing the profits is to calculate an optimum level of output where Marginal Cost (MC)= Market Price(P). In the graph given, the profit maximizing point is where MC intersects with MR or P. This is at point of price$65 and q output 60. A quantity produced exceeding q60, the MR and P0 will be less than MC, thus the firm will incur economic loss on marginal unit. To increase profit in this case will be by decreasing its output to q0.For quantities less than q0, the MR and P0 will be more than MC, thus the firm will incur profit though not a maximum one. Maximum profits will be attained in this case if output is increased to q0.

answer; i believe the correct answer is (sales promotion;