Total cost schedule for a competitive firm: If market price is $60,what is the maximum profit the firm can earn?

Question

Total cost schedule for a competitive firm:  If market price is $60,what is the maximum profit the firm can earn?

Quizplus · Accepted Answer

To find the maximum profit, we need to find the output level where marginal revenue (MR) equals marginal cost (MC). From the table, we can see that at an output level of 5, the marginal cost is $45 and the marginal revenue is also $45. This means that the firm should produce 5 units of output and sell them at the market price of $60, earning a total revenue of $300. The total cost of producing 5 units is $225, so the maximum profit is $75 (total revenue - total cost). Therefore, the best choice is C.

Total Cost Schedule for a Competitive Firm: If Market