Use the figure to answer the following question(s).
Figure 9-8
-If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.
A) output, 15; total revenue, $45
B) output, 15; total revenue, $60
C) output, 17; total revenue, $68 (approx.)
D) output, 20; total revenue, $80

Question

Use the figure to answer the following question(s).
Figure 9-8 
-If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.
A) output, 15; total revenue, $45 
B) output, 15; total revenue, $60 
C) output, 17; total revenue, $68 (approx.) 
D) output, 20; total revenue, $80

Quizplus · Accepted Answer

The profit-maximizing output is where marginal revenue equals marginal cost. At a price of $4, the marginal revenue is $4. The marginal cost is $4 at an output of 17. So, the profit-maximizing output is 17. Total revenue is price times quantity, so total revenue is $4 x 17 = $68.

Use the Figure to Answer the Following Question(s)