At what output is the firm in equilibrium?

Question 37

MediumOriginal question

A firm sells at a market price of ₹20 a unit. Its total cost schedule is:

Output	0	1	2	3	4	5	6
Total cost (₹)	20	35	45	57	77	103	135

At what output is the firm in equilibrium?

2 units, where MC is lowestCorrect answerYour answer6 units, the largest outputCorrect answerYour answer4 units, where MC = MR = ₹20 and MC is risingCorrect answerYour answer1 unit, where MC is ₹15Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

MC: 15, 10, 12, 20, 26, 32. MR = price = ₹20 for every unit.
MC = MR at the 4th unit, and MC is rising there (12 → 20 → 26). So output is 4 units.

Concept: Equilibrium from a schedule
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsProducer's equilibrium: MC = MR

Practise this chapter →

Ten questions from Revenue & Producer's Equilibrium, at your own pace.

Practise this chapter →

Ten questions from Revenue & Producer's Equilibrium, at your own pace.

At what output is the firm in equilibrium?

Question 37

Explanation