Asked by Nguy?n Tr?ng on Jun 18, 2024
Verified
(Figure: The Profit-Maximizing Firm in the Short Run) Use Figure: The Profit-Maximizing Firm in the Short Run.If the market price is P4,the firm will produce quantity _____ and _____ in the short run.
A) q1;break even
B) q3;make a profit
C) q4;break even
D) q5;lose fixed costs
Market Price
The current value at which an asset or service can be bought or sold, determined by supply and demand forces in the open market.
Break Even
The point at which total costs and total revenues are equal, resulting in no net loss or gain.
Short Run
A period in which at least one factor of production is fixed and cannot be fully adjusted.
- Learn the prerequisites for an enterprise to make a decision on the level of output that maximizes earnings in the short-term period.
- Determine the break-even point and economic profit for firms in perfectly competitive markets.
Verified Answer
TS
Taylor SharpJun 23, 2024
Final Answer :
B
Explanation :
The firm will produce at the quantity where marginal cost equals the market price to maximize profit. If the market price allows the firm to cover variable and fixed costs, it will make a profit.
Learning Objectives
- Learn the prerequisites for an enterprise to make a decision on the level of output that maximizes earnings in the short-term period.
- Determine the break-even point and economic profit for firms in perfectly competitive markets.