Question 43
MediumOriginal questionA 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 |
Why should the firm not produce the 5th unit?
Show the answer and explanation
CorrectNot quiteAnswer A
Correct answer: A
Explanation
MC₅ = 103 − 77 = ₹26, while the unit sells for ₹20.
It adds ₹6 more to cost than to revenue, cutting profit from ₹3 to ₹−3.
- Concept
- MC above MR
- Typical timeTypical
- 70 s
- Your timeYours
- —
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