Use the Following to Answer Questions

question 86

Multiple Choice

Use the following to answer questions:
Figure: The Perfectly Competitive Firm II
-(Figure: The Perfectly Competitive Firm II) Look at the figure The Perfectly Competitive Firm II. If this firm's MR curve is MR₂, then this firm's optimal output is _____ units of output and its economic profit will be _____.

• A) Q₁; positive
• B) Q₂; negative
• C) Q₃; positive
• D) Q₄; negative

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Definitions:

Profit Maximization

The process or strategy of adjusting production and sale operations to achieve the highest possible profit.

Production Function

Describes the relationship between inputs used in production and the output generated from those inputs.

Output

The total amount of goods or services produced by a firm or economy over a specific period.

Marginal Product

The additional output that results from using one more unit of a production input, keeping all other inputs constant.