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?

Question

Quizplus · Accepted Answer

To calculate the maximum monthly profit, we need to find the point where the revenue (quantity sold x price) equals the total costs. We can calculate the quantity sold by dividing the total revenue ($86,400) by the price per table ($120), which gives us 720 tables.

At 720 tables, the total revenue is $86,400, which is equal to the total costs. Any production level lower than this would result in a loss, while any production level higher would result in higher costs than revenue.

Therefore, the maximum monthly profit is $5 profit (720 tables x $120 price - $86,400 total cost = $5,400 profit).

The correct answer is C.

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