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 total quantity for Sweet Grams to produce?

Question

Quizplus · Accepted Answer

To maximize profit, the firm should produce at the quantity where marginal cost equals price. Looking at the table, for plant 1, the marginal cost reaches $1.25 at the output level of 57,100, and for plant 2, the marginal cost reaches $1.25 at the output level of 10,000. Therefore, the total quantity that Sweet Grams should produce is 57,100 + 10,000 = 67,100 (rounded to the nearest hundred). The closest answer choice to this number is B) 57,100.

Sweet Grams Makes Graham Cracker Snack Packages