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Question

To maximize its profit, the firm should produce:

A
0 units
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B
3 units
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C
5 units
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D
7 units
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Solution

The correct option is D 7 units
The firm earns maximum profit at the level of production where MR=MC. At the level of production of 7 units, marginal revenue = marginal cost =52.

Production
(Q)
Price per unit
(P)
Total Cost
(TC)


Marginal cost
(MC)
Total revenue
(TR)
013045

-0
112488

43124
2118125

37236
3112159

34336
4106193

34424
5100230

37500
694273

43564
788325

52616
882389

64656
976465

76684

Formulas:
TR =P×Q
MC =TCnTCn1
MR =TRnTRn1

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