Use the following to answer questions: Table: Two Factories $$\begin{array} { c c c c }
\hline \text { Output }& \begin{array} { c }
\text { Factory l } \
\text { Marginal } \
\text { Output }
\end{array} & \text { Output } & \begin{array} { c }
\text { Factory 2 } \
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 0 & - & 0 & - \
1 & \$ 1.00 & 1 & \$ 0.50 \
2 & 2.00 & 2 & 1.00 \
3 & 3.00 & 3 & 1.50 \
4 & 4.00 & 4 & 2.00 \
5 & 5.00 & 5 & 2.50 \
6 & 6.00 & 6 & 3.00 \
\hline
\end{array}$$
-(Table: Two Factories) If the firm in this table faces a market price of $3.00, how many units of output should it produce in each factory?
A) 6 units in Factory 1 and 5 units in Factory 2
B) 2 units in Factory 1 and 4 units in Factory 2
C) 0 units in Factory 1 and 6 units in Factory 2
D) 3 units in Factory 1 and 6 units in Factory 2

Question

Use the following to answer questions: Table: Two Factories $$\begin{array} { c c c c } 
\hline \text { Output }& \begin{array} { c } 
\text { Factory l } \
\text { Marginal } \
\text { Output }
\end{array} & \text { Output } & \begin{array} { c } 
\text { Factory 2 } \
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 0 & - & 0 & - \
1 & \$ 1.00 & 1 & \$ 0.50 \
2 & 2.00 & 2 & 1.00 \
3 & 3.00 & 3 & 1.50 \
4 & 4.00 & 4 & 2.00 \
5 & 5.00 & 5 & 2.50 \
6 & 6.00 & 6 & 3.00 \
\hline
\end{array}$$
-(Table: Two Factories) If the firm in this table faces a market price of $3.00, how many units of output should it produce in each factory?
A) 6 units in Factory 1 and 5 units in Factory 2
B) 2 units in Factory 1 and 4 units in Factory 2
C) 0 units in Factory 1 and 6 units in Factory 2
D) 3 units in Factory 1 and 6 units in Factory 2

Quizplus · Accepted Answer

The firm should produce where marginal cost equals the market price. For Factory 1, the marginal cost of $3.00 corresponds to 3 units. For Factory 2, the marginal cost of $3.00 corresponds to 6 units.

Use the Following to Answer Questions: Table: Two Factories -(Table: Two Factories) If the Firm in This Table Faces