The schedule of total costs for a table-manufacturing company is presented in the table below. The firm sells its product in a price-taker market at $120 per table. What is the maximum monthly profit (or minimum loss) that the firm will be able to earn?

A) $15 loss
B) zero
C) $5 profit
D) $10 profit

Question

The schedule of total costs for a table-manufacturing company is presented in the table below. The firm sells its product in a price-taker market at $120 per table. What is the maximum monthly profit (or minimum loss) that the firm will be able to earn?

A) $15 loss 
B) zero 
C) $5 profit 
D) $10 profit

Quizplus · Accepted Answer

To calculate the maximum profit or minimum loss, we need to find the point where total revenue (quantity sold x price) equals total cost. From the table, the quantity at which total cost and total revenue intersect is 50 tables. At this point, total revenue is $6,000 (50 tables x $120 per table) and total cost is $5,950, resulting in a profit of $50. Therefore, the maximum monthly profit that the firm will be able to earn is $50 or $5 per table. Choice C is correct.

The Schedule of Total Costs for a Table-Manufacturing Company Is