Question

A perfectly competitive firm has the following cost schedule

Output (units)	0	1	2	3	4	5	6	7	8	9	10
MC(Rs.)	-	11	10	9	8	7	6	7	10	13	19
TC(Rs.)	9	20	30	39	47	54	60	67	77	90	109

If the market price is Rs. 13, to maximize profits the firm should produce ___________.

• A. 8 units
• B. 7 units
• C. 6 units
• D. 9 units

Answer 1

The correct option is D 9 units

Firm will operate at the point that MC =AR (price), to maximize profits in perfect competition.

Therefore, the firm will produce at output level 9 as MC =AR (price), ie 13