Use the following to answer questions: Table: Barrels of Oil
-(Table: Barrels of Oil) Refer to the table. The profit-maximizing level of output is ________ barrels of oil.
A) 1
B) 3
C) 5
D) 7

Question

Use the following to answer questions: Table: Barrels of Oil 
-(Table: Barrels of Oil) Refer to the table. The profit-maximizing level of output is ________ barrels of oil.
A) 1 
B) 3 
C) 5 
D) 7

Quizplus · Accepted Answer

The profit-maximizing level of output is where marginal revenue (MR) equals marginal cost (MC). At the quantity of 5 barrels, the marginal revenue (MR) is $8 and the marginal cost (MC) is $8, which means that the company is maximizing profit at this quantity. At any other quantity, the company would either be producing at a level where it is not maximizing profits or it would be producing at a loss. Therefore, the best choice is option C.

Use the Following to Answer Questions: Table: Barrels of Oil