A gizmo producer operates in a perfectly competitive market with a price of $100 for a can of gizmos. The gizmo producer has a marginal cost curve equal to 0.52q, where q is the number of cans of gizmos produced. The gizmo producer currently produces 192 cans of gizmos. Should the gizmo producer produce 193 cans of gizmos instead? No, the marginal cost of the 192nd box is above marginal revenue, so production is already too high. No, while the marginal cost of the 192nd box is below marginal revenue, the marginal cost of 93rd box is above it, so profit is already maximized. None of these answers. Yes, the marginal cost of the 192nd box is below marginal revenue, so production is too low, and profits are not maximized.

A gizmo producer operates in a perfectly competitive market with a price of $100 for a can of gizmos. The gizmo producer has a marginal cost curve equal to 0.52q, where q is the number of cans of gizmos produced. The gizmo producer currently produces 192 cans of gizmos. Should the gizmo producer produce 193 cans of gizmos instead? No, the marginal cost of the 192nd box is above marginal revenue, so production is already too high. No, while the marginal cost of the 192nd box is below marginal revenue, the marginal cost of 93rd box is above it, so profit is already maximized. None of these answers. Yes, the marginal cost of the 192nd box is below marginal revenue, so production is too low, and profits are not maximized.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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