Question
In: Economics
A profit-maximizing firm is currently producing output, Q = 3 units and selling at a price...
A profit-maximizing firm is currently producing output, Q = 3 units and selling at a price of p = $10. What MUST be true about the firm's costs?
A
The firm's Average Variable Cost is less than $10.
B
The firm's Average Total Cost is less than $10.
C
The firm's Marginal Cost is equal to $10.
D
The firm's Average Fixed cost must be less than $10.
Solutions
Expert Solution
Option C (The firm's marginal cost is equal to $10) is correct.
Reason: Under profit maximization, marginal cost and marginal revenue must be equal. Therefore, marginal revenue or price of $10 must be equal to marginal cost of $10.
Rahul Sunny answered 2 years agoRelated Solutions
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