Reference: Ref 11-2 (Table: Barrels of Oil) Refer to the table. How many barrels of oil should the company produce to maximize profit?
A) 6
B) 7
C) 8
D) 9

Question

Reference: Ref 11-2 (Table: Barrels of Oil) Refer to the table. How many barrels of oil should the company produce to maximize profit?
A) 6 
B) 7 
C) 8 
D) 9

Quizplus · Accepted Answer

The company should produce the quantity of oil where marginal revenue (MR) equals marginal cost (MC) to maximize profit. From the table, we can see that at 8 barrels of oil, MR=MC=$20, which is the highest profit. Therefore, the best choice is C.

Reference: Ref 11-2 (Table: Barrels of Oil) Refer to the Table