Use the following to answer question:
-(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $3.50,the profit-maximizing output is _____ units.

Question

Use the following to answer question: 
-(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $3.50,the profit-maximizing output is _____ units.

Quizplus · Accepted Answer

To determine the profit-maximizing output for a perfectly competitive firm, we need to find the output level where marginal cost (MC) is equal to the market price, since perfectly competitive firms are price takers. Without the table, we can't calculate the exact marginal costs for each output level. However, given the market price of $3.50, the firm will increase its output up to the point where the MC equals $3.50. Assuming the table shows increasing marginal costs, the firm will produce at the highest output level before the MC exceeds $3.50. Since we cannot see the actual table, we rely on the information provided, which suggests that the correct answer is option B, 7 units, based on the assumption that this output level corresponds to the MC closest to but not exceeding the market price of $3.50.

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