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Output Marginal Revenue Marginal Cost 0 1$16$10 216 9 3 1613 4 1617 516 21 Refer to the above...

Question:

OutputMarginal RevenueMarginal Cost
0- -
1$16$10
216 9
3 1613
4 1617
516 21

Refer to the above data. If the firm's minimum average variable cost is $10, the firm's profit-maximizing level of output would be

a. 2

b. 3

c. 4

d. 5

Marginal Revenue and Marginal Cost:

Marginal revenue and marginal cost are two aspects of a production decision that matter to firms. An additional unit of production is profitable only if the marginal revenue is higher than the marginal cost.

Answer and Explanation: 1

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The answer is b).

An additional unit of output should be produced if the marginal revenue is higher than the marginal cost. For the first unit of...

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Profit Maximization: Definition, Equation & Theory

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Chapter 24 / Lesson 6
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Learn the profit maximization definition, its importance, and explore the profit maximization theory. See how to calculate profit maximization with examples.


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