Exhibit 24-8 Refer to Exhibit 24-8. Average total cost at the profit-maximizing level of output equals
A)$120.
B)$140.
C)$70.
D)$50.
E)There is not enough information given to answer this question.

Question

Exhibit 24-8  Refer to Exhibit 24-8. Average total cost at the profit-maximizing level of output equals
A)$120. 
B)$140. 
C)$70. 
D)$50. 
E)There is not enough information given to answer this question.

Quizplus · Accepted Answer

At the profit-maximizing level of output, the firm will produce where marginal revenue (MR) equals marginal cost (MC). From the graph, we can see that at Q = 20, MR = MC. At that level of output, the average total cost (ATC) is approximately $140. Therefore, the answer is B.