The Sunshine Corporation finds its costs are $40 when it produces no output.Its total variable costs (TVC)change with output as shown in the accompanying table. Refer to the above information.The marginal cost of the third unit of output is:

Question

The Sunshine Corporation finds its costs are $40 when it produces no output.Its total variable costs (TVC)change with output as shown in the accompanying table.  Refer to the above information.The marginal cost of the third unit of output is:

Quizplus · Accepted Answer

The best choice is to produce the third unit of output, as the marginal cost of producing the third unit is only $15, which is less than the price the firm can charge for selling the output. This will result in a profit for the firm. However, producing any additional units beyond the third unit would result in increasing marginal costs that exceed the price the firm can charge, resulting in losses. Therefore, the best choice is to produce only the third unit of output.

The Sunshine Corporation Finds Its Costs Are $40 When It