Exhibit 23-10

-Refer to Exhibit 23-10. What quantity of output should the profit-maximizing firm produce?

Question

Exhibit 23-10
 
-Refer to Exhibit 23-10. What quantity of output should the profit-maximizing firm produce?

Quizplus · Accepted Answer

The profit-maximizing quantity of output is where marginal revenue equals marginal cost. In this case, that occurs at a quantity of 6. At any lower quantity, marginal revenue is greater than marginal cost, meaning the firm can increase profits by increasing output. At any higher quantity, marginal cost is greater than marginal revenue, meaning the firm can increase profits by decreasing output. Therefore, the profit-maximizing firm should produce 6 units of output.

Exhibit 23-10 -Refer to Exhibit 23-10. What Quantity of Output Should the of Output