The Amber Outfitting Company is a profit-maximizing firm with market power in car wrapping services. The firm wraps cars for $750 each. One can conclude that the firm is producing a level of output at which:

Question

Quizplus · Accepted Answer

The profit-maximizing firm will produce at a level of output where marginal revenue (MR) equals marginal cost (MC). Since the firm has market power, it can set the price of car wrapping at $750. This means that the marginal revenue earned from selling an additional unit of output will also be $750. Therefore, the firm will produce at a level of output where marginal cost equals $750, which is the same as marginal revenue. Thus, the correct answer is D.

The Amber Outfitting Company Is a Profit-Maximizing Firm with Market