Question 10 1 point D 47 AC 24 2 15 50 70 Quantity The above

Question 10 (1 point) D 47? A/C $24 2?- 15-- 50 70 Quantity The above graph represents a competitive price searcher firm in the short run. Assuming the firm is trying to maximize profit (or minimize his losses), what price shouid this firmanze $10 $15 $20 $24

Solution

A competitive price searcher firm maximizes profit (or minimize loss) when it produce that level of output corresponding to which marginal revenue equals marginal cost.

The MC curve is intersecting the MR curve corresponding to output of 50 units.

So, the profit-maximizing level of output is 50 units.

The price corresponding to this level of output (with respect to demand curve) is $20.

So,

This firm should charge $20.

Hence, the correct answer is the option (c) [$20].