Marginal revenue equals marginal cost at an output of 15 units. At this output, marginal revenue equals $30, average variable cost equals $20, and average total cost equals $25. In the short run, a profit-maximizing firm will earn a profit of
A) -$75.
B) $0.
C) $75.
D) $150.

Question

Quizplus · Accepted Answer

At the profit-maximizing output of 15 units, the price (marginal revenue) is $30. The average total cost is $25, so the profit per unit is $30 - $25 = $5. For 15 units, the total profit is 15 * $5 = $75.

Marginal Revenue Equals Marginal Cost at an Output of 15