Question

question
the table below represents a firms profit for producing and selling spatulas. assume that if a firm would have the same profit at two different levels of output, then the firm would choose the greater level of output. assume that the only levels of output that the firm can produce are the levels of output given in the table. at what level of output does the firm maximize profits?

quantity	total cost	marginal cost	total revenue	marginal revenue
0	$25.00	-	$0.00	-
11	$34.97	$1.27	$11.00	$1.00
22	$46.96	$1.18	$22.00	$1.00
33	$54.00	$1.00	$33.00	$1.00
44	$72.92	$1.18	$44.00	$1.00
55	$100.75	$1.45	$55.00	$1.00

Explanation:

Step1: Recall profit - maximization condition

Profit $\pi=TR - TC$. We need to calculate profit for each quantity level.

Step2: Calculate profit for quantity = 0

$\pi_0=TR_0 - TC_0=0 - 25=- 25$

Step3: Calculate profit for quantity = 11

$\pi_{11}=TR_{11}-TC_{11}=11 - 34.97=- 23.97$

Step4: Calculate profit for quantity = 22

$\pi_{22}=TR_{22}-TC_{22}=22 - 46.96=- 24.96$

Step5: Calculate profit for quantity = 33

$\pi_{33}=TR_{33}-TC_{33}=33 - 54=- 21$

Step6: Calculate profit for quantity = 44

$\pi_{44}=TR_{44}-TC_{44}=44 - 72.92=- 28.92$

Step7: Calculate profit for quantity = 55

$\pi_{55}=TR_{55}-TC_{55}=55 - 100.75=- 45.75$

Since the highest (least negative) profit is - 21 at quantity = 33.

Answer:

33