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

If the market price in Figure 9-9 increases to $60, what should the firm do?
A) produce 10 per day
B) produce 15 per day
C) produce 20 per day
D) increase its price to $70

Question

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

If the market price in Figure 9-9 increases to $60, what should the firm do?
A) produce 10 per day 
B) produce 15 per day 
C) produce 20 per day 
D) increase its price to $70

Quizplus · Accepted Answer

At a market price of $60, the firm should produce the quantity of output where marginal cost (MC) equals marginal revenue (MR). This occurs at a quantity of 20, where the MC curve intersects the MR curve. At any lower output, the firm can increase profit by producing more. At any higher output, the firm can increase profit by producing less. Therefore, choice C is the best option.

Use the Figure to Answer the Following Question(s)