Table 14-10
Suppose that a firm in a competitive market faces the following revenues and costs:
-Refer to Table 14-10. This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to
A)$3.
B)$5.
C)$7.
D)$9.

Question

Table 14-10
Suppose that a firm in a competitive market faces the following revenues and costs: 
-Refer to Table 14-10. This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to
A)$3. 
B)$5. 
C)$7. 
D)$9.

Quizplus · Accepted Answer

The firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to the market price. In this case, the market price is $7, so producing up to the point where marginal cost is $7 will maximize profits. Beyond that point, the marginal cost exceeds the market price and the firm would experience losses. Therefore, the firm should produce up to 5 units, where marginal cost is $7, and stop production after that point.

Table 14-10 Suppose That a Firm in a Competitive Market Faces the Faces