Please answer both parts A and B Consider the graph, which depicts a single competitive firmthat wishes to maximize profits given its costs of production.a. What is the profit-maximizing rule for this firm?A profit-maximizing firm willmaximize profits at any output for which themarginal cost curve is below marginal revenue.raise prices to the highest point on the marginalcost curve.produce a level of output such that marginal revenueequals marginal cost.produce a level of output such that marginal revenueexceeds marginal cost.b. At which level of output will this firm maximize profits?Output:units1000-Price and cost ($)900-800-700-600-500-400-300-200-100-01234Marginal cost5Output6Marginal revenue8T910

The perfectly competitive market decides the price and individual firm does not have control over…

Consider the graph, which depicts a single competitive firm hat wishes to maximize profits given its costs of production. 1. What is the profit-maximizing rule for this firm? A profit-maximizing firm will

Consider the graph, which depicts a single competitive firm hat wishes to maximize profits given its costs of production. 1. What is the profit-maximizing rule for this firm? A profit-maximizing firm will

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 6SCQ: A firms marginal cost curve above the average variable cost curve is equal to the films individual...

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Question

Please answer both parts A and B

Consider the graph, which depicts a single competitive firm
that wishes to maximize profits given its costs of production.
a. What is the profit-maximizing rule for this firm?
A profit-maximizing firm will
maximize profits at any output for which the
marginal cost curve is below marginal revenue.
raise prices to the highest point on the marginal
cost curve.
produce a level of output such that marginal revenue
equals marginal cost.
produce a level of output such that marginal revenue
exceeds marginal cost.
b. At which level of output will this firm maximize profits?
Output:
units
1000-
Price and cost ($)
900-
800-
700-
600-
500-
400-
300-
200-
100-
0
1
2
3
4
Marginal cost
5
Output
6
Marginal revenue
8
T
9
10

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