Table 14-4

-Refer to Table 14-4.A firm operating in a competitive market and facing the total costs listed in the table will not produce an output level beyond

Question

Table 14-4
 
-Refer to Table 14-4.A firm operating in a competitive market and facing the total costs listed in the table will not produce an output level beyond

Quizplus · Accepted Answer

To determine the profit-maximizing level of output for a firm in a competitive market, the firm should produce at the quantity where marginal cost (MC) equals marginal revenue (MR).

At output level 6, the marginal cost is $7 and the marginal revenue is $9, which implies that the firm can increase the profit by producing one more unit until the marginal cost becomes higher than the marginal revenue.

At output level 7, the marginal cost ($9) is equal to the marginal revenue ($9), meaning that the firm can either produce 6 or 7 units without affecting its profits, but producing 7 units does not yield any additional profit. Therefore, the limit on output is 6 units, and the answer is C) 6 units.

Table 14-4 -Refer to Table 14-4.A Firm Operating in a Competitive Market