1 Answer the following questions, with reference to the diagram below, for a profit-maximizing firm operating under perfect competition. MC / SRATC p W Costs and revenues ($) D = AR = MR I V N Q1 Q2 Q3 Q4 Output a Explain which level of output represents profit maximization for the firm. [2] b Explain which level of output represents the most economically efficient. [2] c With reference to the diagram, explain whether the profit-maximizing firm earns economic profit. [3]