Suppose that a perfectly competitive firm faces a market price of $5per unit, and at this price the upward-sloping portion of the firm’s marginal cost curve crosses its marginal revenue curve at an output level of 1,500units. If the firm produces 1,500units, its average variable costs equal $5.50per unit, and its average fixed costs equal $0.50per unit.
What is the firm’s profit-maximizing (or loss-minimizing) output level?
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