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JAMB Economics 1998 Question 19

Question 19

Market Structures

In the diagram above, profit is maximized at the output level

Diagram for this question
  1. A.ON
  2. B.OK
  3. C.OL
  4. D.OF.
Show the answer and explanation

Answer: C (OL)

Explanation

Profit is maximized where MC = MR and MC is rising. MC cuts MR twice; at N it is falling, but at L it is rising, so the best output is OL.