Find the profit maximizing level of output.
Quantity sold
(Units) Total Revenue
(Rs.) Marginal Cost
(Rs.)
1 $14$ $15$
2 $30$ $12$
3 $44$ $9$
4 $48$ $5$
5 $52$ $6$

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Solution

Profit is maximum when output level $= 3$ units are produced, as it is here that the difference between TR and TVC is maximised.
TVC= ${M C}_{n} + {M C}_{(} n - 1)$
Thus, ${T V C}_{1}$ $= 15$
${T V C}_{2}$ $= 27$
${T V C}_{3}$ $= 36$
${T V C}_{4}$ $= 41$
${T V C}_{5}$ $= 47$

Then, $P r o f i t = T R - T V C$
Thus, $P_{1} = - 1$
$P_{2} = 3$
$P_{3} = 8$
$P_{4} = 7$
$P_{5} = 5$
From this we see, Profit is Maximum at $P_{3} = 8$ .
Therefore, the Profit Maximizing Level of Output is at 3 Units.

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Quantity Sold (Units)	Total Revenue (Rs.)	Marginal Cost (Rs.)
$1$ $2$ $3$ $4$ $5$	$12$ $26$ $34$ $40$ $42$	$15$ $9$ $6$ $2$ $3$

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Quantity Sold	$0$	$1$	$2$	$3$	$4$	$5$	$6$	$7$	$8$	$9$	$10$
$T C (R s .)$	$5$	$15$	$22$	$27$	$31$	$38$	$49$	$63$	$81$	$101$	$123$

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