Measer Enterprises produces standardized telephone keypads and operates in a highly competitive market in which the keypads are sold for $4.50 each. Because of the nature of the production technology, the firm can produce only between 10,000 and 13,000 units per month, in fixed increments of 1,000 units. Measer has the following cost structure:
Production and Cost DataUnits Produced| 11,000 | 10,000 | 12,000 | 13,000 | |
| Factory cost, variable | $37,000 | $40,800 | $44,600 | $48,400 |
| Factory cost, fixed | 9,000 | 9,000 | 9,000 | 9,000 |
| Selling cost, variable | 6,000 | 6,600 | 7,400 | 8,200 |
| Administration, fixed | 6,000 | 6,000 | 6,000 | 6,000 |
| Total | $58,000 | $62,400 | $67,000 | $71,600 |
| Average unit cost | $5.80 | $5.67 | $5.58 | $5.51 |
Required:
At what output level should the firm operate?
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