Determine firm profit-maximizing output

Reference no: EM1367952

Assume that perfectly competitive firm faces the market price (P) $5 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output (Q) level of 1,500 units. If the firm produces 1,500 units, its average variable costs (AVC) equal $5.50 per unit, and its average fixed costs (AFC) equal 50 cents per unit. What is the firmâ??s profit-maximizing (or loss minimizing) output (Q) level? What is the amount of its economic profits (or losses) at this output level? What would be the firm's decision at this price/output level?

Reference no: EM1367952

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