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Question
Microeconomics
Posted 7 months ago

The average total cost and marginal cost curves for Blammo Enterprises are shown in this figure:

If the firm's objective is profit maximization, at what price will this firm be willing to sell 6 units?

Choose 1 answer:
(A) $34\$ 34
(B) $60\$ 60
(C) $4\$ 4
(D) $58\$ 58
(E) $41\$ 41
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Answer from Sia
Posted 7 months ago
Solution
a
Identify the Marginal Cost (MC) at Quantity 6: The MC at quantity 6 is $4
b
Determine the Price for Profit Maximization: In a perfectly competitive market, firms maximize profit where P=MCP = MC. Therefore, the price at which the firm will be willing to sell 6 units is $4
Answer
$4
Key Concept
Marginal Cost Pricing
Explanation
In a perfectly competitive market, firms maximize profit by setting the price equal to the marginal cost (MC). For Blammo Enterprises, the MC at 6 units is $4, so the firm will sell at this price.

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