Use the following to answer question:
-(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $4.50,profit at the profit-maximizing quantity of output is:

Question

Use the following to answer question: 
-(Table: Total Cost for a Perfectly Competitive Firm)Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $4.50,profit at the profit-maximizing quantity of output is:

Quizplus · Accepted Answer

To determine the profit-maximizing output, we need to find the quantity where marginal cost equals marginal revenue. In this case, that quantity is 6 units. At 6 units, the total cost is $20.50 and the total revenue is 6 x $4.50 = $27.00. Therefore, the profit is $27.00 - $20.50 = $6.50. However, we need to subtract the fixed cost of $4.50, leaving us with a profit of $2.00.

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