The data below are for a competitive business (price-taker).If the market price is $1,100 per unit,the company should $\begin{array}{rrrrr}
&\text { Average } & \text { Average } & \text { Average }\
\text { Output}& \text {Fixed Costs}& \text {Variable Costs}& \text {Total Costs} &\text {Marginal Cost }\
\hline
0&\$ 3,000\
1 & \$ 3,000 & \$ 900 & \$ 3,900 & \$ 900 \
2 & \$ 1,500 & \$ 800 & \$ 2,300 & \$ 700 \
3 & \$ 1,000 & \$ 700 & \$ 1,700 & \$ 500 \
4 & \$ 750 & \$ 600 & \$ 1,350 & \$ 300 \
5 & \$ 600 & \$ 500 & \$ 1,100 & \$ 100 \
6 & \$ 500 & \$ 550 & \$ 1,050 & \$ 800 \
7 & \$ 429 & \$ 600 & \$ 1,029 & \$ 900 \
8 & \$ 375 & \$ 650 & \$ 1,025 & \$ 1,000 \
9 & \$ 333 & \$ 700 & \$ 1,033 & \$ 1,100 \
10 & \$ 300 & \$ 750 & \$ 1,050 & \$ 1,200
\end{array}$

Question

Quizplus · Accepted Answer

To maximize profit, the company should continue producing as long as its marginal cost is less than or equal to the market price. From the table, we can see that the marginal cost of the 9th unit is $1,100, which is equal to the market price. Therefore, the company should produce 9 units to maximize profit.

To calculate the profit, we need to subtract the total costs from the total revenue, which is equal to the market price times the number of units sold. At 9 units, the total revenue is $9,900 ($1,100 x 9) and the total costs are $8,300 ($3,000 + $700 + $700 + $600 + $500 + $550 + $600 +$650 + $700). Therefore, the profit is $1,600 ($9,900 - $8,300), or $600 per unit.

The Data Below Are for a Competitive Business (Price-Taker) A)six Units with Profit of $300