Exhibit 10-3 The profit-maximizing output for the firm in Exhibit 10-3 is
A)0 units
B)1 unit
C)3 units
D)5 units
E)impossible to determine because MC and MR are not known

Question

Exhibit 10-3  The profit-maximizing output for the firm in Exhibit 10-3 is
A)0 units 
B)1 unit 
C)3 units 
D)5 units 
E)impossible to determine because MC and MR are not known

Quizplus · Accepted Answer

The profit-maximizing output for a firm is where marginal cost equals marginal revenue. At the output of 3 units, the marginal cost is $8 and the marginal revenue is $8, which means that the firm is earning maximum profit at this output level. At any other output level, the marginal cost and marginal revenue are not equal, which means that the profit will be lower.

Exhibit 10-3 the Profit-Maximizing Output for the Firm in Exhibit