The following table shows the total revenue (in dollars) and total cost (in dollars) from the production and sale of different units of a product.
Table 2-1
$\begin{array} { | c | c | c | c | }
\hline \text { Price } & \text { Quantity } & \text { Total Revenue } & \text { Total Cost } \
\hline 15 & 1 & 15 & 3 \
\hline 14 & 2 & 28 & 7 \
\hline 13 & 3 & 39 & 12 \
\hline 12 & 4 & 48 & 18 \
\hline 11 & 5 & 55 & 25 \
\hline 10 & 6 & 60 & 33 \
\hline
\end{array}$
-Refer to Table 2-1. What is the profit-maximizing level of output for the firm?
A) 3 units
B) 2 units
C) 1 unit
D) 5 units
E) 6 units

Question

The following table shows the total revenue (in dollars) and total cost (in dollars) from the production and sale of different units of a product.
Table 2-1
 $\begin{array} { | c | c | c | c | } 
\hline \text { Price } & \text { Quantity } & \text { Total Revenue } & \text { Total Cost } \
\hline 15 & 1 & 15 & 3 \
\hline 14 & 2 & 28 & 7 \
\hline 13 & 3 & 39 & 12 \
\hline 12 & 4 & 48 & 18 \
\hline 11 & 5 & 55 & 25 \
\hline 10 & 6 & 60 & 33 \
\hline
\end{array}$
-Refer to Table 2-1. What is the profit-maximizing level of output for the firm?
A) 3 units
B) 2 units
C) 1 unit
D) 5 units
E) 6 units

Quizplus · Accepted Answer

Profit is maximized where the difference between total revenue and total cost is the greatest. By examining the table, we can calculate the profit for each level of output (total revenue - total cost). The profits are as follows: for 1 unit = $12, for 2 units = $21, for 3 units = $27, for 4 units = $30, for 5 units = $30, and for 6 units = $27. Thus, the profit-maximizing level of output is at 4 or 5 units. However, since 4 units is not an option, the correct answer is 5 units (D).

The Following Table Shows the Total Revenue (In Dollars) and Total