The marginal cost of an item is shown below If the price of

The marginal cost of an item is shown below. If the price of the item is $24, how much should the firm produce? Marginal Cost Output per hour 400 500 600 $19 521 $24 O A. 500 per hour. O B. 600 per hour. C. 400 per hour. 0 D. There is insufficient information to determine the answer

Solution

Answer is B. 600 per hour.

Explanation: Equilibrium output should be at the point where the marginal revenue (i.e. price) is equal to marginal cost.

Hence, the equilibrium output shall be 600 per hour.