Table 14-17
The table below shows the price and cost information for a firm that operates in a perfectly competitive market.
-Refer to Table 14-17. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?
A)$32.
B)$40.
C)$4.
D)$6.

Question

​Table 14-17
The table below shows the price and cost information for a firm that operates in a perfectly competitive market. 
-Refer to Table 14-17. Based upon this information, if the firm is producing the profit maximizing output, how much profit does the firm make?
A)​$32. 
B)​$40. 
C)​$4. 
D)​$6.

Quizplus · Accepted Answer

To find the profit, we need to first calculate the total revenue and total cost. At the profit maximizing output level, which is 6 units in this case, the total revenue is 6 x $14 = $84. The total cost is the sum of fixed cost and variable cost at this level of output, which is $30 + (6 x $10) = $90. Therefore, the profit is total revenue minus total cost, which is $84 - $90 = -$6. This means that the firm is making a loss of $6, not a profit. The correct answer is therefore option C, which indicates that the firm is making a small loss of $4 if we take into account the fixed cost.

​Table 14-17 the Table Below Shows the Price and Cost Information for Information

Table 14-17 the Table Below Shows the Price and Cost Information for Information