The
following diagram shows (i) the market demand curve of Apple-Cinnamon Cheerios,
(ii) the isoprofit curves of the producer firm, and (iii) the firm’s profit
function curve. Based
on the graph, which THREE of the following are correct?

Question

The
following diagram shows (i) the market demand curve of Apple-Cinnamon Cheerios,
(ii) the isoprofit curves of the producer firm, and (iii) the firm’s profit
function curve.  Based
on the graph, which THREE of the following are correct?

Answer

The profit maximising choice for the firm is where its marginal rate of substitution between the price charged and the quantity produced equate its marginal rate of transformation.

Answer

The profit maximising choice for the firm is where the highest attainable isoprofit curve is tangent to the demand curve.

Answer

The profit maximising choice for the firm is at the peak of its profit function curve.

Answer

The highest profit that the firm can make is $60,000.

Crowdly

The following diagram shows (i) the market demand curve of Apple-Cinnamon Cheeri...

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