At what level of output does marginal cost equal marginal revenue?

$\begin{array} { c c c }
\text { No. Units Produced } & \text { Total Revenue } & \text {Total Costs } \
0 & 0 & 0 \
1 & 100 & 50 \
2 & 180 & 110 \
3 & 250 & 180 \
4 & 290 & 270 \
5 & 310 & 380
\end{array}$
A) 1
B) 2
C) 3
D) 4

Question

At what level of output does marginal cost equal marginal revenue?

$\begin{array} { c c c } 
 \text { No. Units Produced } & \text { Total Revenue } & \text {Total Costs  } \
0 & 0 & 0 \ 
1 & 100 & 50 \ 
2 & 180 & 110 \ 
3 & 250 & 180 \ 
4 & 290 & 270 \ 
5 & 310 & 380 
\end{array}$
A) 1
B) 2
C) 3
D) 4

Quizplus · Accepted Answer

To find the level of output where marginal cost equals marginal revenue, we need to compare the changes in total costs and total revenue for each additional unit produced. The difference between total revenue and total costs for each unit produced gives us the marginal revenue and marginal cost respectively.

The marginal revenue and marginal cost for each unit of output are as follows:

1. Marginal revenue for unit 1 = 100 - 0 = 100; Marginal cost for unit 1 = 50 - 0 = 50
2. Marginal revenue for unit 2 = 80 (180 - 100); Marginal cost for unit 2 = 60 (110 - 50)
3. Marginal revenue for unit 3 = 70 (250 - 180); Marginal cost for unit 3 = 70 (180 - 110)
4. Marginal revenue for unit 4 = 40 (290 - 250); Marginal cost for unit 4 = 90 (270 - 180)
5. Marginal revenue for unit 5 = 20 (310 - 290); Marginal cost for unit 5 = 110 (380 - 270)

We see that marginal cost intersects with marginal revenue at unit 3, where both are equal to $70. Therefore, the best choice is C) 3.

At What Level of Output Does Marginal Cost Equal Marginal