Exhibit 8-4 Marginal cost and revenue for a firm $$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Unit } \
\text { Quantity }
\end{array} & \text { Marginal Cost } & \begin{array} { c }
\text { Marginal } \
\text { Revenue }
\end{array} \
\hline 12 & \$ 5 & \$ 9 \
13 & 6 & 9 \
14 & 7 & 9 \
15 & 8 & 9 \
16 & 9 & 9 \
17 & 10 & 9 \
\hline
\end{array}$$
-In Exhibit 8-4, this firm is currently producing 16 units of output. What would you advise this firm to do?

Question

Exhibit 8-4 Marginal cost and revenue for a firm $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Unit } \
\text { Quantity }
\end{array} & \text { Marginal Cost } & \begin{array} { c } 
\text { Marginal } \
\text { Revenue }
\end{array} \
\hline 12 & \$ 5 & \$ 9 \
13 & 6 & 9 \
14 & 7 & 9 \
15 & 8 & 9 \
16 & 9 & 9 \
17 & 10 & 9 \
\hline
\end{array}$$
-In Exhibit 8-4, this firm is currently producing 16 units of output. What would you advise this firm to do?

Quizplus · Accepted Answer

At 16 units of output, marginal cost equals marginal revenue. This is the profit-maximizing quantity.

Exhibit 8-4 Marginal Cost and Revenue for a Firm -In Exhibit 8-4, This Firm Is Currently Producing 16 Units