The following table shows some costs and prices faced by a company that produces submarines.
Table 7.3
-In Table 7.3,at the profit-maximizing rate of output,marginal cost is equal to _____ and marginal revenue is equal to _____.
A) $30 million;$90 million
B) $50 million;$50 million
C) $40 million;$70 million
D) $70 million;$30 million

Question

The following table shows some costs and prices faced by a company that produces submarines.
Table 7.3 
-In Table 7.3,at the profit-maximizing rate of output,marginal cost is equal to _____ and marginal revenue is equal to _____.
A) $30 million;$90 million 
B) $50 million;$50 million 
C) $40 million;$70 million 
D) $70 million;$30 million

Quizplus · Accepted Answer

At the profit-maximizing rate of output, a fundamental principle of economics is that marginal cost (MC) equals marginal revenue (MR). This condition is necessary for profit maximization in perfectly competitive markets. Therefore, the correct answer is the one where MC equals MR, which is option B) $50 million; $50 million.

The Following Table Shows Some Costs and Prices Faced by a Company