Table 4-3

-Refer to Table 4-3.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $30,Marko's will produce
A)0 shirts.
B)1 shirt.
C)3 shirts.
D)4 shirts.

Question

Table 4-3
 
-Refer to Table 4-3.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $30,Marko's will produce
A)0 shirts. 
B)1 shirt. 
C)3 shirts. 
D)4 shirts.

Quizplus · Accepted Answer

Given the market price is $30, Marko's will produce up to the point where the marginal cost is less than or equal to the market price. Without the specific values from Table 4-3, the general principle is that a firm will continue to produce additional units as long as the marginal cost of producing an additional unit is less than or equal to the price it can sell the unit for. Since the correct answer is D (4 shirts), it implies that the marginal cost of producing the fourth shirt is less than or equal to $30, and the marginal cost of producing a fifth shirt would be higher than $30, making 4 shirts the optimal production level at that price.

Table 4-3 -Refer to Table 4-3.The Table Above Lists the Marginal Cost