Refer to Table 9.3. If the market price is $84, then this firm will maximize profits by producing unit(s) of output and its profits will be .

A) five; $140
B) six; $140
C) six; $240
D) seven; $116

Question

Refer to Table 9.3. If the market price is $84, then this firm will maximize profits by producing ________ unit(s) of output and its profits will be ________.

A) five; $140
B) six; $140
C) six; $240
D) seven; $116

mary leigh andrada · Accepted Answer

Final Answer : B, Explanation :   To maximize profits, a firm will produce where marginal cost (MC) is equal to or just below the market price, provided the price is above average variable cost (AVC) to avoid losses. At a market price of $84, producing 6 units fits this criterion as the MC for the 6th unit is $84, which is equal to the market price. Profits are calculated as total revenue minus total costs. For 6 units, total revenue is   6 × $ 84 = $ 504 6 	imes \$84 = \$504 6 × $84 = $504  , and total costs (TC) are \$364, making profits   $ 504 − $ 364 = $ 140  \$504 - \$364 = \$140 $504 − $364 = $140  .

Refer to Table 9.3. If the market price is $84, then this firm will maximize profits by producing unit(s) of output and its profits will be .

A) five; $140
B) six; $140
C) six; $240
D) seven; $116

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Table 9.3. If the market price is $84, then this firm will maximize profits by producing ________ unit(s) of output and its profits will be ________.A) five; $140B) six; $140C) six; $240D) seven; $116

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Table 9.3. If the market price is $84, then this firm will maximize profits by producing unit(s) of output and its profits will be .

A) five; $140
B) six; $140
C) six; $240
D) seven; $116