The following data confront a business:

$\begin{array}{cc}
\text { Output }&\text { Marginal Revenue } &\text { Marginal Cost } \
0&16 & 10 \
2&16 & 9 \
3&16 & 13 \
4&16 & 15 \
5&16 & 21\6
\end{array}$
-If a business chooses to produce 5 units of output:
A)the last unit produced will add $5 to profit
B)the last unit produced will subtract from profit
C)profits will be maximized
D)it will continue to increase output since each additional unit produced adds to profit
E)the last unit of output will add $16 to profit

Question

The following data confront a business:

$\begin{array}{cc}
\text { Output }&\text { Marginal Revenue } &\text { Marginal Cost } \
0&16 & 10 \
2&16 & 9 \
3&16 & 13 \
4&16 & 15 \
5&16 & 21\6
\end{array}$
-If a business chooses to produce 5 units of output:
A)the last unit produced will add $5 to profit
B)the last unit produced will subtract from profit
C)profits will be maximized
D)it will continue to increase output since each additional unit produced adds to profit
E)the last unit of output will add $16 to profit

Quizplus · Accepted Answer

At 5 units of output, the Marginal Cost (21) is greater than the Marginal Revenue (16), meaning the last unit produced reduces profit.

The Following Data Confront a Business -If a Business Chooses to Produce 5 Units of Output