-In Exhibit 11-11,the widgets are sold in a perfectly competitive market at $10 each.The price of rubber is $50 per pound.To maximize profit,the widget producer should buy and use:
A) 2 pounds of rubber
B) 3 pounds of rubber
C) 4 pounds of rubber
D) 5 pounds of rubber
E) 6 pounds of rubber

Question

-In Exhibit 11-11,the widgets are sold in a perfectly competitive market at $10 each.The price of rubber is $50 per pound.To maximize profit,the widget producer should buy and use:
A) 2 pounds of rubber 
B) 3 pounds of rubber 
C) 4 pounds of rubber 
D) 5 pounds of rubber 
E) 6 pounds of rubber

Quizplus · Accepted Answer

In a perfectly competitive market, the firm maximizes profit where marginal cost equals marginal revenue. If widgets sell for $10 each, the firm should use the amount of rubber that allows the production of widgets where the cost of additional rubber ($50 per pound) equals the revenue from additional widgets produced.

-In Exhibit 11-11,the Widgets Are Sold in a Perfectly Competitive