Table 13-9
Suppose that a firm in a competitive market faces the following revenues and costs:

-Refer to Table 13-9.In order to maximize profit,the firm will produce a level of output where marginal cost is equal to

Question

Table 13-9
Suppose that a firm in a competitive market faces the following revenues and costs:
 
-Refer to Table 13-9.In order to maximize profit,the firm will produce a level of output where marginal cost is equal to

Quizplus · Accepted Answer

The firm should produce at the level of output where marginal cost is equal to marginal revenue, which is the same as the market price in a competitive market. In this case, the market price is $9. At a quantity of 4 units, the marginal cost is also $9, which is therefore the profit-maximizing level of output. At any higher output level, the marginal cost exceeds the market price, causing the firm to lose money on each additional unit produced.

Table 13-9 Suppose That a Firm in a Competitive Market Faces the Faces