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A price-taking burger seller has marginal cost of ₹ 9 at 20 units, ₹ 10 at 30 units, ₹ 14 at 40 units, and ₹ 25 at 50 units. If each burger sells for ₹ 14, the profit-maximising output is:
A20 units
B30 units
C50 units
D40 units
Answer & Solution
Correct answer: D. 40 units
1. For a price taker, AR = MR = price = ₹ 14.
2. Profit is maximised where MR = MC with MC rising.
3. From the data, MC equals ₹ 14 at 40 units.
4. At 50 units MC ₹ 25 exceeds price, so output stops at 40 units.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.8_
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