Use the figure to answer the following question(s).
Figure 9-6

The average total cost ( ATC ) and marginal costs ( MC ) of a firm producing in a price-taker industry are depicted in Figure 9-6. If the current market price of the firm's product is $15, what output should this firm produce?

Question

Use the figure to answer the following question(s).
Figure 9-6

The average total cost ( ATC ) and marginal costs ( MC ) of a firm producing in a price-taker industry are depicted in Figure 9-6. If the current market price of the firm's product is $15, what output should this firm produce?

Quizplus · Accepted Answer

The firm should produce where marginal cost (MC) intersects with marginal revenue (which is equal to the price in a perfectly competitive market). In this case, that is at an output of 15 units. Any output less than 15 would result in a lower profit, and any output greater than 15 would also result in a lower profit. Therefore, the firm should produce 15 units of output.

Use the Figure to Answer the Following Question(s)