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This is not the most optimal production level. Production should be increased to the level where MC is closest to MR without going over MR.
This company cannot operate profitably at any production level given. However, its lowest loss occurs at the production level of 4 units. Total revenue at that level is $90 × 4, or $360 and total cost is $92 × 4, or $368, for a loss of $8. This is also the level where MC is closest to MR without going over MR, with the exception of 1 unit produced. However, at a production level of 1 unit, total revenue would be $90 and total cost would be $185, for a loss of $95. In this case, marginal revenue is greater than its marginal cost at the production level of 4 units, but at 5 units the marginal cost is greater than its marginal revenue.
This is not the most optimal production level. Production should be increased to the level where MC is closest to MR without going over MR. At a level of 5 units MC > MR, so the company's total costs would increase by more than its total revenue by producing one additional unit and the company would lose income.
This is not the most optimal production level. Production should be increased to the level where MC is closest to MR without going over MR.