Use the figure to answer the following question(s).
Figure 9-4
-Figure 9-4 indicates the cost conditions for a firm operating in a price-taker market. If the market price of the firm's product is $6, what action will maximize the firm's profit?
A) go out of business since it cannot make a profit
B) produce an output of 3 million
C) produce an output of 5 million
D) produce an output of 6 million

Question

Use the figure to answer the following question(s).
Figure 9-4 
-Figure 9-4 indicates the cost conditions for a firm operating in a price-taker market. If the market price of the firm's product is $6, what action will maximize the firm's profit?
A) go out of business since it cannot make a profit 
B) produce an output of 3 million 
C) produce an output of 5 million 
D) produce an output of 6 million

Quizplus · Accepted Answer

In a price-taker market, the firm maximizes profit by producing where marginal cost (MC) equals the market price. If the market price is $6, the firm should produce the output level where MC is $6, which is at 5 million units.

Use the Figure to Answer the Following Question(s)