The table below shows output,marginal cost,and average variable cost for the production of pairs of shoes.All costs are in dollars.
TABLE 7-6
-Refer to Table 7-6.The firm's marginal product of its variable factor is maximized when it produces ________ units of output.
A)50
B)90
C)100
D)110
E)170

Question

The table below shows output,marginal cost,and average variable cost for the production of pairs of shoes.All costs are in dollars.
  TABLE 7-6
-Refer to Table 7-6.The firm's marginal product of its variable factor is maximized when it produces ________ units of output.
A)50 
B)90 
C)100 
D)110 
E)170

Quizplus · Accepted Answer

To maximize their profit, firms generally produce output where marginal cost equals marginal revenue. However, since price is not given in the table, we will assume that this firm operates in a perfectly competitive market and therefore the price is equal to the average revenue. 
Thus, to determine where marginal cost equals marginal revenue, we can look at where marginal cost intersects with the average revenue. 
We can see that the intersection point of marginal cost and average revenue (which is equal to price in a perfectly competitive market) is around 110 units of output. Therefore, the firm's marginal product of its variable factor is maximized at 110 units of output.

The Table Below Shows Output,marginal Cost,and Average Variable Cost for the Production