Table 10.4 Table 10.4 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories.
-Refer to Table 10.4.Victoria's profit-maximising output is where
A)total profit equals $3.
B)marginal revenue and marginal cost both equal $4.
C)marginal revenue and marginal cost both equal $3.
D)marginal cost is at its minimum value.

Question

Table 10.4  Table 10.4 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories.
-Refer to Table 10.4.Victoria's profit-maximising output is where
A)total profit equals $3. 
B)marginal revenue and marginal cost both equal $4. 
C)marginal revenue and marginal cost both equal $3. 
D)marginal cost is at its minimum value.

Quizplus · Accepted Answer

Victoria's profit-maximising output occurs where marginal revenue (MR) equals marginal cost (MC). From Table 10.4, we can see that the marginal cost is constant at $2 per box, while the marginal revenue declines as the quantity sold increases. The marginal revenue equals $3 when 2 boxes are sold per week, and remains at $3 for any higher quantity sold. Therefore, Victoria's profit-maximising output is where marginal revenue and marginal cost both equal $3, which is achieved by selling 2 boxes per week. At this output level, the total revenue is $14, the total cost is $8, and the total profit is $6, which is the highest possible profit for Victoria. Thus, the correct answer is C.

Table 104 Table 10