The table given below shows the total revenue and total cost of a firm at different levels of output.Table 10.2

-Consider the perfectly competitive firm described in Table 10.2. How many units of the good should the firm produce to maximize profit?

Question

The table given below shows the total revenue and total cost of a firm at different levels of output.Table 10.2
 
-Consider the perfectly competitive firm described in Table 10.2. How many units of the good should the firm produce to maximize profit?

Quizplus · Accepted Answer

To maximize profit, the firm should produce at the point where marginal revenue (MR) equals marginal cost (MC). In this case, the MR and MC are highest at 18 units, where MR = $87 and MC = $38. At any point before or after 18 units, either MR or MC is lower, resulting in lower profit. Therefore, the firm should produce 18 units to maximize profit.

The Table Given Below Shows the Total Revenue and Total