Refer to the information provided in Table 8.8 below to answer the following question(s).
Table 8.8
$$\begin{array} { c c c c c }
\begin{array} { c }
\text { Number of } \
\text { FruitBaskets }
\end{array} &\text { TFC } & \text { TVC } & \text { TC } & \text { MC } \
\hline 0 & \$ 100 & \$ 0 & \$ 100 & - - \
\hline 1 & 100 & 20 & 120 & 20 \
\hline 2 & 100 & 30 & 130 & 10 \
\hline 3 & 100 & 42 & 142 & 12 \
\hline 4 & 100 & 62 & 162 & 20 \
\hline 5 & 100 & 92 & 192 & 30 \
\hline 6 & 100 & 136 & 236 & 44 \
\hline
\end{array}$$
-Refer to Table 8.8. Assume that Polynesian Fruit sells fruit baskets in a perfectly competitive market. The market price of a fruit basket is $30. To maximize profits, Polynesian Fruit should sell ________ fruit basket(s) and their profit is ________.
A) zero; $0
B) two; -$70
C) three; -$52
D) five; -$42

Question

Refer to the information provided in Table 8.8 below to answer the following question(s).
Table 8.8
 $$\begin{array} { c c c c c } 
\begin{array} { c } 
 \text { Number of } \
\text { FruitBaskets }
\end{array} &\text { TFC } & \text { TVC } & \text { TC } & \text { MC } \
\hline 0 & \$ 100 & \$ 0 & \$ 100 & - - \
\hline 1 & 100 & 20 & 120 & 20 \
\hline 2 & 100 & 30 & 130 & 10 \
\hline 3 & 100 & 42 & 142 & 12 \
\hline 4 & 100 & 62 & 162 & 20 \
\hline 5 & 100 & 92 & 192 & 30 \
\hline 6 & 100 & 136 & 236 & 44 \
\hline
\end{array}$$
-Refer to Table 8.8. Assume that Polynesian Fruit sells fruit baskets in a perfectly competitive market. The market price of a fruit basket is $30. To maximize profits, Polynesian Fruit should sell ________ fruit basket(s) and their profit is ________.
A) zero; $0
B) two; -$70
C) three; -$52
D) five; -$42

Quizplus · Accepted Answer

To maximize profits in a perfectly competitive market, a firm should produce where marginal cost (MC) is equal to the market price, as long as the price is above average variable cost (AVC). Here, the market price is $30. Looking at the MC column, the closest MC to the market price without going over is $30 at 5 fruit baskets. To calculate profit, subtract total cost (TC) from total revenue (TR). TR is the market price ($30) times the quantity sold (5), which equals $150. TC at 5 baskets is $192. Thus, profit is $150 - $192 = -$42.

Refer to the Information Provided in Table 8 -Refer to Table 8