Question 53
HardOriginal 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 |
If the market price rose to ₹28, how many units would the firm now produce?
Show the answer and explanation
CorrectNot quiteAnswer C
Correct answer: C
Explanation
MC: 15, 10, 12, 20, 26, 32. With MR = ₹28, the 5th unit adds ₹28 of revenue for ₹26 of cost, so it is produced.
The 6th unit would cost ₹32 for ₹28 of revenue, so the firm stops at 5: a higher price moves it up its MC curve to a larger output.
- Concept
- Output at a higher price
- Typical timeTypical
- 100 s
- Your timeYours
- —
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