Answer to Question #106973 in Macroeconomics for Johnson

Question

Using the axis Depict the marginal revenue and marginal cost curve with the conclusion that the optimal short run output is q = 1000

Answer 1

If the industry is perfectly competitive, then marginal revenue (MR) curve is horizontal, marginal cost (MC) curve is upward-sloping, they will intersect (MR = MC) at the optimal short run output q = 1000.