1. The following diagram shows the market demand curve of Apple Cinnamon Cheerios, the isoprofit curves of the producer firm, and the firm's profit function curve. Based on the graph, which of the following statements are correct?
a. The highest profit that the firm can make is $60,000.
b. The profit-maximising choice for the firm is where the highest attainable isoprofit curve is tangent to the demand curve.
c. The profit-maximising choice for the firm is where its marginal rate of substitution between the price charged and the quantity produced is equal to its marginal rate of transformation.
d. The profit-maximising choice for the firm is at the peak of its profit function curve.