A firm has the demand and total cost schedules given in the followin table. If i

Question

A firm has the demand and total cost schedules given in the followin table. If it wants to maximize profits, how much output should it produce?

Quantity       Price        Total Cost

1                  $6            $1.00

2                    5              2.50

3                    4              6.00

4                    3              7.00

5                    2             11.00

Please show how answer is recieved by working problem out all the way. Please do not give short answer without showing how you came up with it.

Explanation / Answer

Quantity       Price        Total Cost profit = revenue- cost

1                  $6            $1.00 6-1=5

2                    5              2.50 5*2- 2.5= 7.5

3                    4              6.00 3*4- 6= 6

4                    3              7.00 12-7= 5

5                    2             11.00 10- 11= -1

hence we will produce Quantilty= 2 becauce it generate higher profit

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