Question

profits
marginal cost of running shoe inserts
this graph shows the marginal costs of each pair of running shoe inserts produced. select the correct answer from the options available.
at what level of production are you making the greatest profit?
○ pair 2
○ pair 4
○ pair 6
○ pair 7

Explanation:

To maximize profit, we produce until marginal cost (MC) equals marginal revenue (MR). Assuming MR is constant (common in such models), we look for when MC starts to rise above MR. The graph shows MC is lowest and stable until Pair 4, then starts rising. Before Pair 5, MC is low, so profit is maximized at Pair 4 (since after that, MC increases, reducing profit growth).

Answer:

Pair 4