Table 8.1 Table 8.1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units.
-Refer to Table 8.1.If the market price of each camera case is $8 and the firm maximises profit, what is the amount of the firm's profit or loss?
A)$0 (it breaks even)
B)Loss of $1000
C)Profit of $440
D)Loss of $440

Question

Table 8.1  Table 8.1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases.Assume that output can only be increased in batches of 100 units.
-Refer to Table 8.1.If the market price of each camera case is $8 and the firm maximises profit, what is the amount of the firm's profit or loss?
A)$0 (it breaks even) 
B)Loss of $1000 
C)Profit of $440 
D)Loss of $440

Quizplus · Accepted Answer

To determine the profit-maximizing output level, we need to find the level of output where marginal cost equals marginal revenue, which occurs at an output level of 300 units. At this output level, the firm's total cost is $1,760 ($610 + $550 + $420 + $180), and the total revenue is $2,400 (300 units x $8 per unit). Therefore, the firm's profit is $640 ($2,400 - $1,760).

Table 81 Table 8