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S2
S2.00
(a) Rim MC
300 600 Quantity
$4.0014Pric.
52.00
(b) Market
/MC
Q1 02 Quantity
According to the above figures, how many units of output will be supplied to the market if there are 300 identical firms and a market price of $4.00? O 180,000 O 200,000 O 150,000 O 120,000
Expert Solution
Computation of Number of Units of Output:
The firm will maximize profit when the Marginal Revenue (which is Price = $4) equals the Marginal Cost.
Here, MR = MC when quantity is 600.
So, each of the 300 firms will produce 600 units.
Hence, Total Production = 300 * 600 = 180,000
The correct option is 1st "180,000".
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