Table 5.2-Jeans Production
-If the firm in Table 5.2 receives $7.00 for each pair of jeans,in the short run it should:
A) Produce 30 pairs of jeans.
B) Produce 40 pairs of jeans.
C) Produce 20 pairs of jeans.
D) Only produce jeans if the price is greater than average total cost.

Question

Table 5.2-Jeans Production 
-If the firm in Table 5.2 receives $7.00 for each pair of jeans,in the short run it should:
A) Produce 30 pairs of jeans. 
B) Produce 40 pairs of jeans. 
C) Produce 20 pairs of jeans. 
D) Only produce jeans if the price is greater than average total cost.

Quizplus · Accepted Answer

At the production level of 30 pairs of jeans, the firm maximizes its profit or minimizes its loss, as this is typically the output level where marginal cost equals marginal revenue (price in this case).