ABC Company is currently producing 450 units of output. The output is sold in a perfectly competitive market at a price of $35 . The marginal cost of the 450th unit is $38
Is ABC Company producing at the profit-maximizing level of output? Explain.
No, ABC is not producing at the profit-maximizing level of output. The marginal cost of the 450th unit is greater than the marginal revenue the firm earns by selling that unit. Therefore, selling the 450th unit lowers profit.
You might also like to view...
Based on the production data for Pat's Pizza Parlor in the above table, the marginal product of the 4th worker is ________ pizzas
A) 5 B) 8 C) 10 D) 45
A corporation seeking to expand, and looking for the least risky financing option would choose:
a. stocks b. bonds c. retained earnings d. a bank loan
In Figure 4-18, there would be a shortage of T-shirts if the price were
A. $10 and the market price will rise. B. $8 and the market will tend toward equilibrium. C. below $8 and the shortage persists. D. between $8 and $6 and the shortage will get larger.
"I'm telling you, instead of charging $50 each, they could give the opera tickets away for free, and I myself still wouldn't go—ever!" What can we say about this person's demand for opera tickets?
A) His price elasticity is infinite, which means his demand curve is upward sloping. B) His price elasticity is exactly equal to 1, which means his demand curve is unit elastic. C) His price elasticity is exactly equal to 50, which means his demand curve is very elastic. D) He doesn't have a demand for opera tickets.