OJ's Orange Juice produces orange juice to sell in a perfectly competitive market. Given uncertainty in weather patterns, OJ has to determine how much juice to produce prior to knowing the competitive price. It is estimated that the competitive price will be $5 with 20 percent chance and an 80 percent chance the price will be $2. If the marginal cost of producing orange juice is MC = 2Q, then to maximize expected profits, OJ should produce

A. 0.25 units.

B. 0.90 units.

C. 1.15 units.

D. 1.30 units

Answer rating: 100% (QA)

As every competitive firm maximizes profit by setting P MC ... View the full answer