Asked by Brit'Ney McCoy on Jul 28, 2024
Verified
(Figure: Revenues,Costs,and Profits for Tomato Producers III) Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If the market price of a bushel of tomatoes is $14,in the short run the farmer's profit-maximizing output is _____ bushels.
A) 2
B) 3
C) 4
D) 5
Profit-Maximizing
A method or strategy businesses use to achieve the highest possible profit from their operations.
Perfectly Competitive
Refers to a market structure where many firms sell identical products, and there are no barriers to new firms entering the market.
Market Price
The prevailing market price for buying or selling an asset or service currently.
- Understand the concept of profit maximization in a perfectly competitive market.
- Determine the profit-maximizing output level for a firm in the short run.
Verified Answer
RJ
Rojenee JonesJul 30, 2024
Final Answer :
C
Explanation :
In a perfectly competitive market, a profit-maximizing producer will produce up to the point where marginal cost (MC) equals the market price. Without the figure, we assume that at $14, the MC of producing the next bushel of tomatoes equals the market price at 4 bushels, making option C the correct choice.
Learning Objectives
- Understand the concept of profit maximization in a perfectly competitive market.
- Determine the profit-maximizing output level for a firm in the short run.