Use the following to answer questions: Table: Competitive Firm
-(Table: Competitive Firm) Refer to the table. For the seventh unit of output, total profit is:
A) $630.
B) $90.
C) $160.
D) $470.

Question

Use the following to answer questions: Table: Competitive Firm 
-(Table: Competitive Firm) Refer to the table. For the seventh unit of output, total profit is:
A) $630. 
B) $90. 
C) $160. 
D) $470.

Quizplus · Accepted Answer

To find the profit for the seventh unit, we must first determine the total cost and total revenue for producing seven units. Total cost is the sum of fixed cost and variable cost, which is $60 + $270 = $330. Total revenue is the price per unit (which is given as $90) times the quantity produced, which is 7 units, so total revenue is $630. Profit is total revenue minus total cost, so profit for the seventh unit is $630 - $330 = $300. However, we must also account for the fact that the firm could have earned a profit of $160 by producing 6 units, as shown in the table. Therefore, the best choice is to produce 6 units, which maximizes profit at $160.

Use the Following to Answer Questions: Table: Competitive Firm