Consider a firm with the following cost and revenue information: ATC = $20,AVC = $10, and P = MR = $30. If the firm follows the rule to maximize profits, its output level is 3. Therefore MC equals
A) $20
B) $10
C) $30
D) $90
E) $3

Question

Quizplus · Accepted Answer

To maximize profits, a firm will produce where marginal cost (MC) equals marginal revenue (MR). Given that P = MR = $30, the MC must also be $30.

Consider a Firm with the Following Cost and Revenue Information