Table 16-6
Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling.

-Refer to Table 16-6.If the government required Traci's to produce at the efficient scale of output,how many haircuts would Traci's sell?

Question

Table 16-6
Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling.
 
-Refer to Table 16-6.If the government required Traci's to produce at the efficient scale of output,how many haircuts would Traci's sell?

Quizplus · Accepted Answer

The efficient scale of output is where marginal cost equals marginal revenue. Looking at the table, we can determine that the marginal cost of producing the fourth haircut is $15, which equals the marginal revenue. Therefore, Traci's would sell at least 4 haircuts if forced to produce at the efficient scale of output. The marginal cost of the fifth haircut is also $15, but the marginal revenue is only $10. Therefore, it is not efficient for Traci's to produce the fifth haircut. Thus, Traci's would sell either 4 or 5 haircuts if required to produce at the efficient scale of output.

Table 16-6 Traci's Hairstyling Is One Salon Among Many in the Market