Suppose that Sandy owns a farm in North Carolina and Patowns a farm in Iowa, and Sandy's farm is generally moreproductive than Pat's. If both Sandy and Pat sell their corn inthe same market, Sandy should produce the output at themarginal cost that is:
A)less than the marginal cost of Pat's production.
B)equal to the marginal cost of Pat's production.(True Answer )Correct
C)greater than the marginal cost of Pat's production.
D)equal to total revenue in the market.

Question

Quizplus · Accepted Answer

Sandy's more productive farm allows her to produce each unit of corn at a lower marginal cost than Pat. In order to compete in the same market and sell their corn, Sandy should produce at the same marginal cost as Pat to maximize their profits. If Sandy were to produce at a higher marginal cost, she would not be able to sell her corn at the same price as Pat and would lose potential profits. If she were to produce at a lower marginal cost, she could potentially sell her corn for a lower price than Pat and still make a profit, but this would not maximize her profits. Therefore, producing at the same marginal cost as Pat is the best choice.

Suppose That Sandy Owns a Farm in North Carolina and Patowns