According to the Rational Rule for Sellers, the manager of this company should choose to produce _____ of output and charge a price of _____.
$$\begin{array} { | l | l | l | l | l | l | }
\hline \text { Quantity } & \text { Price } & \begin{array} { l }
\text { Total } \
\text { revenue }
\end{array} & \begin{array} { l }
\text { Total } \
\text { cost }
\end{array} & \begin{array} { l }
\text { Marginal } \
\text { revenue }
\end{array} & \begin{array} { l }
\text { Marginal } \
\text { cost }
\end{array} \
\hline 1 & \$ 500 & \$ 500 & \$ 400 & \$ 500 & \$ 400 \
\hline 2 & \$ 450 & \$ 900 & \$ 800 & \$ 400 & \$ 400 \
\hline 3 & \$ 400 & \$ 1,200 & \$ 1,200 & \$ 300 & \$ 400 \
\hline 4 & \$ 350 & \$ 1,400 & \$ 1,600 & \$ 200 & \$ 400 \
\hline
\end{array}$$
A)one unit; $400
B)two units; $450
C)three units; $400
D)four units; $350

Question

According to the Rational Rule for Sellers, the manager of this company should choose to produce _____ of output and charge a price of _____.
$$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Quantity } & \text { Price } & \begin{array} { l } 
\text { Total } \
\text { revenue }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { cost }
\end{array} & \begin{array} { l } 
\text { Marginal } \
\text { revenue }
\end{array} & \begin{array} { l } 
\text { Marginal } \
\text { cost }
\end{array} \
\hline 1 & \$ 500 & \$ 500 & \$ 400 & \$ 500 & \$ 400 \
\hline 2 & \$ 450 & \$ 900 & \$ 800 & \$ 400 & \$ 400 \
\hline 3 & \$ 400 & \$ 1,200 & \$ 1,200 & \$ 300 & \$ 400 \
\hline 4 & \$ 350 & \$ 1,400 & \$ 1,600 & \$ 200 & \$ 400 \
\hline
\end{array}$$
A)one unit; $400
B)two units; $450
C)three units; $400
D)four units; $350

Quizplus · Accepted Answer

The Rational Rule for Sellers states that a firm should produce up to the point where marginal revenue equals marginal cost. At two units, marginal revenue ($400) equals marginal cost ($400), and the price is $450.

According to the Rational Rule for Sellers, the Manager of This