The table above shows the total cost for Happy Cows, a perfectly competitive dairy farm, at various levels of production. The price for Happy Cows dairy is $10 per unit of dairy product.
-Refer to the table above. If Happy Cows is currently producing 501 units of dairy products, which of the following statements is true?

Question

Quizplus · Accepted Answer

Without the specific table data, we can apply general economic principles. If Happy Cows is producing beyond the profit-maximizing output level, decreasing production would reduce costs more than revenue, thus increasing profit. This suggests that the current output level is beyond the point where marginal cost equals marginal revenue, the profit-maximizing condition in perfect competition.

The Table Above Shows the Total Cost for Happy Cows