Sweet Grams makes graham cracker snack packages. Sweet Grams is a multi- plant firm with two production facilities. The a table summarizes the total marginal cost of production at various output levels in the separate plants. Assume Sweet Grams is a perfectly competitive firm.
-Refer to the table above. If Sweet Grams is a perfectly competitive firm and the market price $1.25 per unit, what is the profit- maximizing quantity for Sweet Grams to produce at Plant 1?

Question

Quizplus · Accepted Answer

To determine the profit-maximizing quantity, we need to find the output level where marginal cost equals the market price. For Plant 1, this occurs at an output level of 30,100 units, where the marginal cost is $1.25. At any higher output level, the marginal cost exceeds the market price, resulting in negative profits. Thus, the best choice is C, with a profit-maximizing quantity of 30,100 units.

Sweet Grams Makes Graham Cracker Snack Packages