Final answer:
In a situation where MR intersects MC at two different quantities, a firm should select the output level where MR intersects the upward-sloping MC curve, as it maximizes profit; thus, the correct output is Q = 65.
Step-by-step explanation:
When choosing the level of output, a firm must consider where the marginal revenue (MR) intersects with marginal cost (MC). For a firm facing an intersection of MR and MC at two points, as given in the scenario where at a price of $2, MR intersects MC at Q = 20 and Q = 65, the firm should select the level of output that maximizes profit. This is traditionally at the quantity where MR intersects MC from above, indicating the upward-sloping part of the MC curve.
It is inefficient for a firm to operate on the downward-sloping part of the MC curve as it results in lower profit or higher losses. Hence, in this case, the correct choice of output level for the firm is Q = 65, where MR intersects the upward sloping MC, ensuring the firm is maximizing profit rather than incurring unnecessary losses that occur at the Q = 20 intersection.