Use the figure to answer the following question(s).
Figure 9-4
-If the market price of the product in Figure 9-4 rose to $8, indicate the firm's profit-maximizing output and total revenue.
A) output, 5 million; total revenue, $30 million
B) output, 5 million; total revenue, $40 million
C) output, 6 million; total revenue, $10 million (approx.)
D) output, 6 million; total revenue, $48 million

Question

Use the figure to answer the following question(s).
Figure 9-4 
-If the market price of the product in Figure 9-4 rose to $8, indicate the firm's profit-maximizing output and total revenue.
A) output, 5 million; total revenue, $30 million 
B) output, 5 million; total revenue, $40 million 
C) output, 6 million; total revenue, $10 million (approx.) 
D) output, 6 million; total revenue, $48 million

Quizplus · Accepted Answer

The profit-maximizing output occurs where marginal cost equals marginal revenue. If the price is $8, the firm will produce where this price equals marginal cost. Assuming this occurs at 6 million units, total revenue is price times quantity, which is $8 * 6 million = $48 million.

Use the Figure to Answer the Following Question(s)