Refer to the data provided in Table 9.2 below to answer the question(s) that follow.
Table 9.2 $$\begin{array} { l l l l l l l }
\text { q } & \text { TFC } & \text { TVC } & \text { TC } & \text { MC } & \text { AVC } & \text { ATC } \
\hline 0 & \$ 50 & \$ 0 & \$ 50 & - - & - - & - - \
1 & 50 & 20 & 70 & 20 & 20 & 70 \
2 & 50 & 30 & 80 & 10 & 15 & 40 \
3 & 50 & 45 & 95 & 15 & 15 & 31.67 \
4 & 50 & 62 & 112 & 17 & 15.50 & 28 \
5 & 50 & 90 & 140 & 28 & 18 & 28 \
6 & 50 & 132 & 182 & 42 & 22 & 30.33 \
7 & 50 & 186 & 236 & 54 & 26.57 & 33.71 \
\hline
\end{array}$$
-Refer to Table 9.2. If the market price is $20, then to maximize profits this firm should produce
A) zero units of output.
B) one unit of output.
C) two units of output.
D) four units of output.

Question

Refer to the data provided in Table 9.2 below to answer the question(s) that follow.
Table 9.2 $$\begin{array} { l l l l l l l } 
\text { q } & \text { TFC } & \text { TVC } & \text { TC } & \text { MC } & \text { AVC } & \text { ATC } \
\hline 0 & \$ 50 & \$ 0 & \$ 50 & - - & - - & - - \
1 & 50 & 20 & 70 & 20 & 20 & 70 \
2 & 50 & 30 & 80 & 10 & 15 & 40 \
3 & 50 & 45 & 95 & 15 & 15 & 31.67 \
4 & 50 & 62 & 112 & 17 & 15.50 & 28 \
5 & 50 & 90 & 140 & 28 & 18 & 28 \
6 & 50 & 132 & 182 & 42 & 22 & 30.33 \
7 & 50 & 186 & 236 & 54 & 26.57 & 33.71 \
\hline
\end{array}$$
-Refer to Table 9.2. If the market price is $20, then to maximize profits this firm should produce
A) zero units of output.
B) one unit of output.
C) two units of output.
D) four units of output.

Quizplus · Accepted Answer

To maximize profits, a firm should produce where marginal cost (MC) is equal to or just below the market price, without exceeding it. From the table, at 4 units of output, MC is $17, which is the highest quantity produced before MC exceeds the market price of $20.

Refer to the Data Provided in Table 9 -Refer to Table 9