Use the following to answer questions :
-(Table: Spring Water)Use Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.The profit-maximizing output is _____ cases.

Question

Use the following to answer questions : 
-(Table: Spring Water)Use Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.The profit-maximizing output is _____ cases.

Quizplus · Accepted Answer

The profit-maximizing output is where marginal revenue (MR) equals marginal cost (MC). At an output of 6 cases, MR is $22 and MC is also $22, so the firm will produce 6 cases of water to maximize profits. At any other output level, the firm could increase profits by producing more or less water.

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