We are asked what is the range of market prices that would assure that the firm would produce exactly 6 generalizations. All we need to do is remember how profit maximizing behavior works. For the firm to produce exactly 6 generalizations means the price must be at least as high as the MC for the 6th unit but not as high as the 7th. As we see below, the MC of the 6th is $35. If the price were any lower the firm wouldn't produce a 6th unit. The MC for the 7th is $40 so the firm would produce 7 units if the price were $40, so the answer is between $35 and $40.
GROSS GENERALIZATIONS | ||
---|---|---|
Output | Total Cost | Marginal Cost |
0 | 25.00 | - |
1 | 35.00 | 10 |
2 | 50.00 | 15 |
3 | 70.00 | 20 |
4 | 95.00 | 25 |
5 | 125.00 | 30 |
6 | 160.00 | 35 |
7 | 200.00 | 40 |