The table given below shows the total revenue and total cost of producing a commodity. Table 22.1
In Table 22.1, marginal revenue exceeds marginal cost:
A)until the fifth unit of output.
B)until the sixth unit of output.
C)up to the seventh unit of output.
D)up to the eighth unit of output.
E)at all units of output.

Question

The table given below shows the total revenue and total cost of producing a commodity. Table 22.1
 In Table 22.1, marginal revenue exceeds marginal cost:
A)until the fifth unit of output. 
B)until the sixth unit of output. 
C)up to the seventh unit of output. 
D)up to the eighth unit of output. 
E)at all units of output.

Quizplus · Accepted Answer

From the given information, we can calculate the marginal revenue and marginal cost for each level of output. The point where marginal revenue equals marginal cost is the profit-maximizing level of output. Based on the calculations, we can see that marginal revenue exceeds marginal cost up to the seventh unit of output. This means that the producer should continue to increase output until reaching the seventh unit, as each additional unit will generate more revenue than cost. Therefore, the best choice is C.

The Table Given Below Shows the Total Revenue and Total