Exhibit 22-3
Refer to Exhibit 22-3. What quantity of output should the profit-maximizing firm produce?

Question

Exhibit 22-3  ​
Refer to Exhibit 22-3. What quantity of output should the profit-maximizing firm produce?

Quizplus · Accepted Answer

The profit-maximizing quantity of output is where marginal revenue (MR) equals marginal cost (MC). Looking at the table, the marginal revenue of producing the 44th unit is $36, which is equal to the marginal cost of producing the 44th unit. At any higher or lower quantity, MR and MC are not equal. Therefore, the profit-maximizing firm should produce 44 units.

Exhibit 22-3 ​

Exhibit 22-3