Exhibit 7-1
-Refer to Exhibit 7-1. Total output in the market is 6 units. To achieve efficiency, Firm B should produce
A)1 unit.
B)3 units.
C)4 units.
D)5 units.
E)6 units.

Question

Exhibit 7-1 
-Refer to Exhibit 7-1. Total output in the market is 6 units. To achieve efficiency, Firm B should produce
A)1 unit. 
B)3 units. 
C)4 units. 
D)5 units. 
E)6 units.

Quizplus · Accepted Answer

To achieve efficiency, the market output should be produced at the point where the marginal cost of each firm equals the market price. At a total output of 6 units, Firm B's marginal cost curve intersects the market price at a quantity of 4 units. Thus, Firm B should produce 4 units to achieve efficiency.

Exhibit 7-1 -Refer to Exhibit 7-1. Total Output in the Market Is