Exhibit 7-4 Marginal cost and revenue for a firm $$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Unit } \
\text { Quantity }
\end{array} & \text { Marginal Cost } & \begin{array} { c }
\text { Marginal } \
\text { Revenue }
\end{array} \
\hline 12 & \$ 5 & \$ 9 \
13 & 6 & 9 \
14 & 7 & 9 \
15 & 8 & 9 \
16 & 9 & 9 \
17 & 10 & 9 \
\hline
\end{array}$$ In Exhibit 7-4, what is this firm's profit-maximizing rate of output?

Question

Exhibit 7-4 Marginal cost and revenue for a firm $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Unit } \
\text { Quantity }
\end{array} & \text { Marginal Cost } & \begin{array} { c } 
\text { Marginal } \
\text { Revenue }
\end{array} \
\hline 12 & \$ 5 & \$ 9 \
13 & 6 & 9 \
14 & 7 & 9 \
15 & 8 & 9 \
16 & 9 & 9 \
17 & 10 & 9 \
\hline
\end{array}$$ In Exhibit 7-4, what is this firm's profit-maximizing rate of output?

Quizplus · Accepted Answer

The profit-maximizing rate of output is where marginal cost (MC) is equal to marginal revenue (MR) or just before MC exceeds MR. Here, at 16 units, MC equals MR at $9, making it the profit-maximizing output.

Exhibit 7-4 Marginal Cost and Revenue for a Firm In Exhibit 7-4, What Is This Firm's Profit-Maximizing Rate of