The optimum level of output for a firm is the level of production that maximizes its profit. In other words, it is the output level at which the firm earns the highest possible profit.
To determine the optimum level of output, a firm needs to consider the relationship between its marginal cost (MC) and marginal revenue (MR). Marginal cost is the additional cost of producing one more unit of output, while marginal revenue is the additional revenue earned from selling one more unit of output.
At the optimum level of output, the firm's marginal revenue should be equal to its marginal cost (MR=MC). This is because if the marginal revenue is higher than the marginal cost, the firm can increase its profit by producing more units. Conversely, if the marginal cost is higher than the marginal revenue, the firm can increase its profit by producing fewer units.
Therefore, the option that represents the optimum level of output for the firm is the point at which the marginal cost curve intersects with the marginal revenue curve. This point is denoted by "OB". Options "BC", "OS", and "BS" represent output levels at which the firm would earn lower profits than at the optimum level of output.
