Assume that the firm in Exhibit 1011 maximizes profit.Its total revenue is
A)$5,200
B)$4,000
C)$3,600
D)$5,600
E)$3,200

Question

Assume that the firm in Exhibit 10­11 maximizes profit.Its total revenue is
A)$5,200 
B)$4,000 
C)$3,600 
D)$5,600 
E)$3,200

Quizplus · Accepted Answer

To maximize profit, the firm should produce at the output level where marginal cost (MC) equals marginal revenue (MR). In Exhibit 10-11, the output level where MC=MR is 7 units. At this level, the price is $800, so the total revenue is:

TR = P x Q = $800 x 7 = $5600

Therefore, the correct answer is D, $5600.

Assume That the Firm in Exhibit 10­11 Maximizes Profit

Assume That the Firm in Exhibit 1011 Maximizes Profit