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.If the government required Traci's to produce at the efficient scale of output,how many haircuts would Traci's sell?

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.If the government required Traci's to produce at the efficient scale of output,how many haircuts would Traci's sell?

Quizplus · Accepted Answer

To produce at the efficient scale of output, Traci's should produce where marginal cost (MC) equals marginal revenue (MR). At a price of $12 per haircut, Traci's can sell 5 haircuts for a total revenue of $60. At 5 haircuts, MC=$12 and MR=$12, indicating that Traci's is producing at the efficient scale. Therefore, Traci's would sell either 4 or 5 haircuts if required to produce at the efficient scale of output. Since the question allows for either answer, B (either 4 or 5) is the best choice.

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