Use the following to answer question:
Figure: The Profit-Maximizing Output and Price
-(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Under perfect competition,the price of the good would be _____ and _____ units would be produced.
A)$600;8
B)$200;8
C)$200;16
D)$600;16

Question

Use the following to answer question:
Figure: The Profit-Maximizing Output and Price 
-(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Under perfect competition,the price of the good would be _____ and _____ units would be produced.
A)$600;8 
B)$200;8 
C)$200;16 
D)$600;16

Quizplus · Accepted Answer

The profit-maximizing output is determined where marginal cost (MC) equals marginal revenue (MR) and the corresponding price is read off the demand curve. In this case, MC intersects MR at 16 units of output, and the corresponding price on the demand curve is $200. Therefore, under perfect competition, the price of the good would be $200, and 16 units would be produced. Answer choice C matches these values.

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