Question 51
HardOriginal questionA firm that must lower its price to sell more has this MR and MC.
| Output | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|
| MR (₹) | 20 | 16 | 12 | 8 | 4 |
| MC (₹) | 14 | 10 | 12 | 15 | 20 |
What is its equilibrium output?
Show the answer and explanation
CorrectNot quiteAnswer D
Correct answer: D
Explanation
MC = MR = ₹12 at the 3rd unit, and MC is rising there (10 → 12 → 15).
The 4th unit would add ₹8 of revenue for ₹15 of cost, so the firm stops at 3.
- Concept
- Equilibrium with falling MR
- Typical timeTypical
- 100 s
- Your timeYours
- —
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