Exhibit 8-10 Price and cost data for a firm

In Exhibit 8-10, following the rule regarding MR and MC, the most profitable output level is:

Question

Exhibit 8-10 Price and cost data for a firm

In Exhibit 8-10, following the rule regarding MR and MC, the most profitable output level is:

Quizplus · Accepted Answer

The most profitable output level is where MR=MC. At output level 1, MR is higher than MC, at output level 2, MR is equal to MC, at output level 3, MR is lower than MC, and at output level 4, MR is much lower than MC. Therefore, output level 3 is the best choice as it maximizes profit.

Exhibit 8-10 Price and Cost Data for a Firm