Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs:

-Refer to Table 14-8.The firm will not produce an output level beyond

Question

Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 14-8.The firm will not produce an output level beyond

Quizplus · Accepted Answer

To determine the profit-maximizing output level, the firm should produce where marginal revenue (MR) equals marginal cost (MC) and produces output until MR=MC. In this case, we can observe that the marginal cost equals marginal revenue at three levels of output:
- At 2 units, the firm has MC=$240 and MR=$240, which implies that it produces 2 units.
- At 5 units, the firm has MC=$330 and MR=$330, which means that it produces 5 units. 
- At 6 units, the firm has MC=$360 and MR=$330. This means that it is not profitable to produce beyond 6 units, because the marginal cost would exceed the marginal revenue, leading to a reduction in profit. Thus, the firm will not produce an output level beyond 6 units.

Table 14-8 Suppose That a Firm in a Competitive Market Faces the Faces