Asked by Brennan Stevens on Jul 05, 2024
Verified
(Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $4.50,the profit-maximizing output is _____ units.
A) 5
B) 7
C) 8
D) 9
Profit-Maximizing Output
This term refers to the level of production at which a business achieves the greatest profit, where marginal cost equals marginal revenue.
Market Price
The current price at which a good or service can be bought or sold in a given market, determined by supply and demand.
Units
Measurements or quantities of a product or service.
- Assess the total income, all-encompassing costs, and earnings for a business operating in a completely competitive market.
Verified Answer
AK
Anamika KunduJul 08, 2024
Final Answer :
C
Explanation :
To find the profit-maximizing output, we need to look for the level of output where marginal cost (MC) equals market price (P). At an output of 8 units, the MC is $4.50, which is equal to the market price of $4.50. At any higher output level, the MC would be greater than the market price, resulting in negative profits. Therefore, the best choice is C, which corresponds to an output of 8 units.
Learning Objectives
- Assess the total income, all-encompassing costs, and earnings for a business operating in a completely competitive market.