Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs:
-Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost
A)is greater than marginal revenue.
B)equals marginal revenue.
C)is less than marginal revenue.
D)is minimized.

Question

Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs: 
-Refer to Table 14-8. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost
A)is greater than marginal revenue. 
B)equals marginal revenue. 
C)is less than marginal revenue. 
D)is minimized.

Quizplus · Accepted Answer

The firm will produce where marginal revenue equals marginal cost. At a quantity of 3, marginal revenue is $15 and marginal cost is $18, indicating that the firm is not maximizing profit at this level of production. To maximize profit, the firm should produce at a level where marginal revenue equals marginal cost, which occurs at a quantity of 4. At this level of production, marginal revenue is $11 and marginal cost is $11, indicating that the firm is maximizing profit.

Table 14-8 Suppose That a Firm in a Competitive Market Faces the Faces