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JAMB Economics 2013 Question 24

Question 24

Market Structures

Use the graph below to answer the question.
The optimum level of output of the firm is

Diagram for this question
  1. A.BC.
  2. B.OB.
  3. C.OS.
  4. D.BS.
Show the answer and explanation

Answer: B (OB.)

Explanation

A firm maximises profit where marginal cost equals marginal revenue. MC cuts MR at C, directly above B, so the best output is OB.