Table 14-1
This table shows the revenue and costs of a parrot farmer.

-Refer to Table 14-1. If the farmer chooses to maximise profit, the appropriate output level is where marginal cost is equal to:

Question

Table 14-1
This table shows the revenue and costs of a parrot farmer.
 
-Refer to Table 14-1. If the farmer chooses to maximise profit, the appropriate output level is where marginal cost is equal to:

Quizplus · Accepted Answer

To maximize profit, the farmer needs to produce where the marginal cost is equal to the marginal revenue. Looking at the table, at 15 parrots, the marginal cost is $15 and the marginal revenue is $20, suggesting that the farmer earns a profit of $5 per parrot. At any level of production higher or lower than 15, the marginal cost is higher than marginal revenue indicating that the farmer would not earn optimal profit at those levels. Therefore, C) 15 parrots is the appropriate output level for profit maximization.

Table 14-1 This Table Shows the Revenue and Costs of a Parrot