Use the following to answer questions: Table: Barrels of Oil
-(Table: Barrels of Oil) Refer to the table. The profit-maximizing level of output is ________ barrels of oil.

Question

Use the following to answer questions: Table: Barrels of Oil 
-(Table: Barrels of Oil) Refer to the table. The profit-maximizing level of output is ________ barrels of oil.

Quizplus · Accepted Answer

The profit-maximizing level of output is where marginal revenue (MR) equals marginal cost (MC). At the quantity of 5 barrels, the marginal revenue (MR) is $8 and the marginal cost (MC) is $8, which means that the company is maximizing profit at this quantity. At any other quantity, the company would either be producing at a level where it is not maximizing profits or it would be producing at a loss. Therefore, the best choice is option C.

Use the Following to Answer Questions: Table: Barrels of Oil