Question

From the following table find out the level of output at which the firm will earn maximum profit supposing the market price of commodity in the market to be Rs. 30.

Answer 1

(a) Total Cost Approach

Total profits are maximum (Rs. 99) when the firm produces and sells 8 units of the commodity,

(b) Marginal Approach

By marginal approach also, we find that the best level of output would be 8 units because at this output both the MR and MC are Rs. 30. Hence, the firm’s profit is maximum ( Rs. 99).