Use the figure to answer the following question(s).
Figure 9-5

If the market price in Figure 9-5 increases to $4, what output should the firm produce, and what would be the firm's maximum profit?
A) output, 3; maximum profit, $3 loss
B) output, 5; maximum profit, zero
C) output, 5; maximum profit, slightly less than $5
D) output, 6; maximum profit, slightly less than $6

Question

Use the figure to answer the following question(s).
Figure 9-5

If the market price in Figure 9-5 increases to $4, what output should the firm produce, and what would be the firm's maximum profit?
A) output, 3; maximum profit, $3 loss 
B) output, 5; maximum profit, zero 
C) output, 5; maximum profit, slightly less than $5 
D) output, 6; maximum profit, slightly less than $6

Quizplus · Accepted Answer

At a market price of $4, the firm should produce 6 units of output, which is where marginal revenue equals marginal cost. At this output level, the firm's total cost is $18, and its total revenue is $22, resulting in a maximum profit of slightly less than $6. Therefore, choice D is the correct answer.

Use the Figure to Answer the Following Question(s)