8 Refer to Table 92 If the market price were 75 this perfect

8) Refer to Table 9-2. If the market price were $75, this perfectly competitive firm wishing to maximize its profits would A) produce 2 units of output. B) produce 6 units of output. C) produce 5 units of output. D) not produce because P

Solution

Output TVC TFC TC MC 0 0 100 100 - 1 40 100 140 40 2 70 100 170 30 3 120 100 220 50 4 180 100 280 60 5 250 100 350 70 6 330 100 430 80 Here Price (MR) is $ 70 equals to MC at 5 units Therefore, the firm shall produce 5 units to maximize profits. Answer is C. Produce 5 units of output