Refer to the data provided in Table 9.1 below to answer the question(s) that follow.
Table 9.1 $$\begin{array} { l l l l l l l }
\text { q } & \text { TFC } & \text { TVC } & \text { TC } & \text { MC } & \text { AVC } & \text { ATC } \
\hline 0 & \$ 50 & \$ 0 & \$ 50 & - - & - - & - - \
1 & 50 & 20 & 70 & 20 & 20 & 70 \
2 & 50 & 30 & 80 & 10 & 15 & 40 \
3 & 50 & 45 & 95 & 15 & 15 & 31.67 \
4 & 50 & 62 & 112 & 17 & 15.50 & 28 \
5 & 50 & 90 & 140 & 28 & 18 & 28 \
6 & 50 & 132 & 182 & 42 & 22 & 30.33 \
7 & 50 & 186 & 236 & 54 & 26.57 & 33.71 \
\hline
\end{array}$$
-Refer to Table 9.1. If the market price is $42, then for this firm to maximize profits it should produce ________ units of output and its profits will be ________.
A) five; $70
B) six; $70
C) six; $120
D) seven; $58

Question

Refer to the data provided in Table 9.1 below to answer the question(s) that follow.
Table 9.1 $$\begin{array} { l l l l l l l } 
\text { q } & \text { TFC } & \text { TVC } & \text { TC } & \text { MC } & \text { AVC } & \text { ATC } \
\hline 0 & \$ 50 & \$ 0 & \$ 50 & - - & - - & - - \
1 & 50 & 20 & 70 & 20 & 20 & 70 \
2 & 50 & 30 & 80 & 10 & 15 & 40 \
3 & 50 & 45 & 95 & 15 & 15 & 31.67 \
4 & 50 & 62 & 112 & 17 & 15.50 & 28 \
5 & 50 & 90 & 140 & 28 & 18 & 28 \
6 & 50 & 132 & 182 & 42 & 22 & 30.33 \
7 & 50 & 186 & 236 & 54 & 26.57 & 33.71 \
\hline
\end{array}$$
-Refer to Table 9.1. If the market price is $42, then for this firm to maximize profits it should produce ________ units of output and its profits will be ________.
A) five; $70
B) six; $70
C) six; $120
D) seven; $58

Quizplus · Accepted Answer

To maximize profits, a firm should produce where marginal cost (MC) is equal to or just below the market price, as long as it covers the average variable cost (AVC) to avoid losses. At a market price of $42, producing 6 units fits this criterion best, as the MC of the 6th unit is $42, matching the market price. The profit is calculated as total revenue minus total cost (TC). For 6 units, total revenue is $6 \times \$42 = \$252$, and total cost is \$182, so profit is $\$252 - \$182 = \$70$.

Refer to the Data Provided in Table 9 -Refer to Table 9