Exhibit 7-17 Marginal revenue and cost per unit curves

-If the price of the firm's product in Exhibit 7-17 is $15 per unit,the firm should:

Question

Exhibit 7-17 Marginal revenue and cost per unit curves
 
-If the price of the firm's product in Exhibit 7-17 is $15 per unit,the firm should:

Quizplus · Accepted Answer

At a price of $15 per unit, the marginal revenue is equal to the marginal cost at a quantity of 300 units. This means that the firm is making a loss (since its average variable cost is above $15), but it would still be better off staying in operation and producing 300 units rather than shutting down permanently. Eventually, the firm may need to make changes to become profitable in the long run, but staying in operation for the time being is the best choice.

Exhibit 7-17 Marginal Revenue and Cost Per Unit Curves