Table 14-6
Suppose that a firm in a competitive market faces the following revenues and costs:

$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Quantity } \
\text { (Units) }
\end{array} & \begin{array} { c }
\text { Total Revenue } \
\text { (Dollars) }
\end{array} & \begin{array} { c }
\text { Total Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 3 \
\hline 1 & 6 & 5 \
\hline 2 & 12 & 8 \
\hline 3 & 18 & 12 \
\hline 4 & 24 & 17 \
\hline 5 & 30 & 23 \
\hline 6 & 36 & 30 \
\hline 7 & 42 & 38 \
\hline
\end{array}$$
-Refer to Table 14-6. In order to maximize profits, the firm will produce

Question

Table 14-6
Suppose that a firm in a competitive market faces the following revenues and costs:
​
​
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 3 \
\hline 1 & 6 & 5 \
\hline 2 & 12 & 8 \
\hline 3 & 18 & 12 \
\hline 4 & 24 & 17 \
\hline 5 & 30 & 23 \
\hline 6 & 36 & 30 \
\hline 7 & 42 & 38 \
\hline
\end{array}$$ ​
-Refer to Table 14-6. In order to maximize profits, the firm will produce

Quizplus · Accepted Answer

To maximize profits, a firm in a competitive market will produce where marginal revenue (MR) equals marginal cost (MC). From the table, we calculate MR and MC for each additional unit. The point where MR equals MC is at 5 units of output, indicating that this is the quantity that maximizes profits.

Table 14-6 Suppose That a Firm in a Competitive Market

Table 14-6
Suppose That a Firm in a Competitive Market