Possible Answers:
A) 2,000 Units
B) 3,000 Units
C) 4,000 Units
D) 5,000 Units
E) We don't have enough information to determine the optimal output level
Option C is correct
Total revenue for 3000 units is 3000*10 = 30000 and total revenue for 4000 units is 4000*9 = 36000. Therefore marginal revenue is (36000-30000)/1000 = 6. At this level marginal cost is also $6 which means that profit is maximized at 4,000 units when marginal cost and marginal revenue both are $6.
Possible Answers: A) 2,000 Units B) 3,000 Units C) 4,000 Units D) 5,000 Units E) We...
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