Part 1In the figure, the marginal cost of the last unit produced by the profit maximizing firm is A. $15. B. $10. C. $5. D. $20. Part 1

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Part 1In the​ figure, the marginal cost of the last unit produced by the profit maximizing firm is A. ​$15. B. ​$10. C. ​$5. D. ​$20. Part 1

BlackTom AI · Accepted Answer

First, I will restate the problem and list all the choices to ensure clarity about what we are evaluating.
Question: In the figure, the marginal cost of the last unit produced by the profit maximizing firm is A. $15, B. $10, C. $5, D. $20.
Options: A) $15, B) $10, C) $5, D) $20.

Now, let's assess each option one by one, explaining why it could or could not be correct based on the concept of marginal cost at the profit-maximizing output level.

Option A: $15. At first glance, assuming the last unit’s marginal cost were $15, this would imply that producing that unit adds $15 to total cost. However, the profit-maximizing condition occurs where marginal cost equals marginal revenue (MC = MR). If the figure shows MR crossing MC at a price or revenue level that corresponds to MC = $10, then $15 would not be the correct marginal cost at the optimum. In short, unless the diagram indicates MC equals $15 at the profit-maximizing quantity, this value would typically be inconsistent with the MR = MC rule for profit maximization.

Option B: $10. This option asserts that the marginal cost of the last unit is $10. If the diagram demonstrates that the quantity chosen by the firm (the profit-maximizing output) occurs where MC equals MR and the MC value at that quantity is $10, then this would be correct. Remember the core principle: maximize profit where the additional revenue from one more unit (MR) equals the additional cost of that unit (MC). If MR = MC = $10 at the chosen output, $10 is the correct marginal cost for the last unit.

Option C: $5. If MC were $5 for the last unit, it would imply that the firm could increase profit by expanding output until MC rises to MR. This would only be true if MR were $5 at the optimal point. If the diagram shows MR crossing MC at a higher MC, or if MR exceeds MC at higher output until MC climbs above MR, then $5 would be incorrect because the profit-maximizing condition would not be met at MC = $5.

Option D: $20. Similar reasoning applies: if MC were $20 for the last unit, the profit-maximizing condition would require MR = $20 at the chosen output. If the figure indicates MR equals MC at a different value, such as $10, then $20 would misstate the marginal cost at the optimum. Additionally, a very high MC like $20 could imply that the optimal output is smaller than the produced quantity if MR falls below $20 beyond the optimum point.

To sum up the reasoning across options, the central test is the MR = MC rule for profit maximization. Each incorrect option would only be valid if the diagram explicitly shows MR equaling that MC value at the profit-maximizing quantity. The correct option aligns with the MC value that matches MR at the profit-maximizing output as depicted in the figure, which is $10 in this case, making option B the accurate choice.

Homework:ch12_homework

Part 1In the figure, the marginal cost of the last unit produced by the profit maximizing firm is A. $15. B. $10. C. $5. D. $20. Part 1

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Homework:ch12_homework

Part 1In the​ figure, the marginal cost of the last unit produced by the profit maximizing firm is A. ​$15. B. ​$10. C. ​$5. D. ​$20. Part 1

View Explanation

Log in for full answers

Similar Questions

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Part 1In the figure, the marginal cost of the last unit produced by the profit maximizing firm is A. $15. B. $10. C. $5. D. $20. Part 1