Suppose a competitive firm has cost, C = (0.002q3 ) + (22q) + 750, marginal cost, MC = 0.006q2 + 22, and revenue, R = 80q. If the firm produces 150 units of output, A. R MC. At this output level (150 units),

A. profit is negative.

B. marginal profit is negative.

C. profit is positive.

D. None of the above.

Options B and C are correct.

Marginal profit is negative. Profit is positive.

Explanation:

At q = 150

R = 80q = 80 (150) = 12,000

C = 0.002 (150) 3 + 22 (150) + 750 = 6750 + 3300 + 750 = 10,800

R > C so first is incorrect.

MR = 80

MC = 0.006 (150 x 150) + 22 = 135 + 22 = 157

MC > MR so B is correct.

Profit = TR - TC = 80 (150) - 0.002 (150) 3 - 22 (150) - 750 = 12000 - 10800 = 1200

Profit is positive.

Marginal profit = MR - MC = 80 - 157 = - 77

MR is Negative