What is the firm's objective if it produces output OX?

The diagram shows the Average Revenue (AR), Marginal Revenue (MR), Marginal Cost (MC), and Average Total Cost (ATC) curves for an oligopolistic firm. Output OX is marked on the quantity axis.

• A: to maximize profit. Profit maximization occurs where Marginal Cost (MC) equals Marginal Revenue (MR). In the diagram, the MC curve intersects the MR curve within its vertical discontinuity at output OX. This is the profit-maximizing condition for a firm facing a kinked demand curve.
• B: to achieve normal profit. Normal profit occurs when Average Revenue (AR) equals Average Total Cost (ATC). At output OX, the AR curve is clearly above the ATC curve, indicating that the firm is earning supernormal profits, not just normal profits.
• C: to achieve productive efficiency. Productive efficiency occurs at the minimum point of the Average Total Cost (ATC) curve, where MC intersects ATC. In the diagram, the minimum point of the ATC curve is to the left of output OX. Therefore, output OX does not represent productive efficiency.
• D: to achieve allocative efficiency. Allocative efficiency occurs when Price (P) equals Marginal Cost (MC), which is equivalent to AR = MC. In the diagram, the AR curve and the MC curve intersect at output OX.

While both profit maximization (MC=MR) and allocative efficiency (AR=MC) appear to occur at output OX based on the diagram, the firm's objective is typically to maximize its own profit. Allocative efficiency is a desirable societal outcome that may or may not be achieved by a firm pursuing its own goals. Therefore, if the firm produces at OX, its objective is profit maximization.

The final answer is $A$