Table 16-5
Traci's Hairstyling is one salon among many in the market for hairstyling.The following table presents cost and revenue data for hair cuts at Traci's Hairstyling.

-Refer to Table 16-5.What is the profit-maximizing output for Traci's Hairstyling?

Question

Table 16-5
Traci's Hairstyling is one salon among many in the market for hairstyling.The following table presents cost and revenue data for hair cuts at Traci's Hairstyling.
 
-Refer to Table 16-5.What is the profit-maximizing output for Traci's Hairstyling?

Quizplus · Accepted Answer

To find the profit maximizing output, we need to look at where marginal revenue (MR) equals marginal cost (MC). In this case, the marginal cost of the fourth haircut is $15, which is exactly equal to the marginal revenue of $15. Therefore, the profit maximizing output is 4 haircuts. At this level of output, the salon will be able to maximize its profits, since producing any more haircuts would result in a decrease in profits.

Table 16-5 Traci's Hairstyling Is One Salon Among Many in the Market