### Graph Analysis: Total Cost and Total RevenueThe image presents a graph illustrating the Total Cost (TC) and Total Revenue (TR) curves for a firm pricing its products at $8 and $10.**Axes:**- The vertical axis represents the Price.- The horizontal axis represents the Output.**Curves:**1. **Total Revenue Curve (TR0) for P = $10:** This curve shows the total revenue when the price is set at $10, starting from the origin and rising upwards.2. **Total Revenue Curve (TR1) for P = $8:** This curve is located below TR0, indicating the total revenue at a $8 price point.3. **Total Cost Curve (TC):** It begins at the origin and rises, intersecting with the TR curves at different points.**Points of Intersection:**- **Point B:** Intersection of TC and TR1.- **Point D:** First intersection of TC and TR0.- **Point E:** Second intersection of TC and TR0.**Vertical Lines:**- Line extending from output levels C, F, J, and G intersect the respective curves.**Profit Maximization:**At a price of $10, profit is maximized at Point D, where the output level is represented by the line from the horizontal axis at point G.### Question:At a price of $10, the profit maximizing level of output for the firm is ____.1. OA2. OC3. OF4. OG**Correct Answer:** OG

The profit is maximized where the gap between the TR and TC is maximum.

Answered: The following figure shows the total…

Business

Economics

The following figure shows the total cost and total revenue for a firm when it prices its products at $8 and $10.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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### Graph Analysis: Total Cost and Total Revenue

The image presents a graph illustrating the Total Cost (TC) and Total Revenue (TR) curves for a firm pricing its products at $8 and $10.

**Axes:**
- The vertical axis represents the Price.
- The horizontal axis represents the Output.

**Curves:**
1. **Total Revenue Curve (TR0) for P = $10:** This curve shows the total revenue when the price is set at $10, starting from the origin and rising upwards.
2. **Total Revenue Curve (TR1) for P = $8:** This curve is located below TR0, indicating the total revenue at a $8 price point.
3. **Total Cost Curve (TC):** It begins at the origin and rises, intersecting with the TR curves at different points.

**Points of Intersection:**
- **Point B:** Intersection of TC and TR1.
- **Point D:** First intersection of TC and TR0.
- **Point E:** Second intersection of TC and TR0.

**Vertical Lines:**
- Line extending from output levels C, F, J, and G intersect the respective curves.

**Profit Maximization:**
At a price of $10, profit is maximized at Point D, where the output level is represented by the line from the horizontal axis at point G.

### Question:
At a price of $10, the profit maximizing level of output for the firm is ____.

1. OA
2. OC
3. OF
4. OG

**Correct Answer:** OG

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