Use the figure to answer the following question(s).
Figure 9-8

If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.
A) output, 15; total revenue, $45
B) output, 15; total revenue, $60
C) output, 17; total revenue, $68 (approx.)
D) output, 20; total revenue, $80

Question

Use the figure to answer the following question(s).
Figure 9-8

If the market price in Figure 9-8 increases to $4, indicate the firm's profit-maximizing output and total revenue.
A) output, 15; total revenue, $45 
B) output, 15; total revenue, $60 
C) output, 17; total revenue, $68 (approx.) 
D) output, 20; total revenue, $80

Quizplus · Accepted Answer

At a price of $4, the profit-maximizing output can be found by looking at the quantity where marginal revenue equals marginal cost, which is approximately 17 units. At this output level, the total revenue is price multiplied by quantity, which is $4 multiplied by 17, or $68. Therefore, the correct choice is (C), output of 17 and total revenue of $68 (approx.).

Use the Figure to Answer the Following Question(s)