A Company Produces at an Output Level Where Marginal Revenue

question 106

Multiple Choice

A company produces at an output level where marginal revenue is equal to marginal cost and has the following revenue and cost levels:
Marginal cost curve intersects the average variable cost curve at $150.
Marginal cost curve intersects the average total cost curve at $200.
Marginal cost curve intersects the marginal revenue curve at $170.
What would you suggest this firm should do in the short run?

• A) The firm should continue to produce at a profit level of $20 per unit.
• B) The firm should continue to produce at a profit level of $30 per unit.
• C) The firm should continue to produce at a profit level of $50 per unit.
• D) The firm should shut down.
• E) The firm should continue to produce at a loss.

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