Question

The following table shows the total cost schedule of a competitive firm. It is given that the price of the good is $Rs.10$. Calculate the profit at each output level. Find the profit maximising level of output.

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

Answer 1

Quantity Sold	$TC(Rs.)$	Price $(Rs.)$	$TR(Rs.)$	$Profit(=TR-TC)(Rs.)$
$0$	$5$	$10$	$0$	$-5$
$1$	$15$	$10$	$10$	$-5$
$2$	$22$	$10$	$20$	$-2$
$3$	$27$	$10$	$30$	$3$
$4$	$31$	$10$	$40$	$9$
$5$	$38$	$10$	$50$	$12$
$6$	$49$	$10$	$60$	$11$
$7$	$63$	$10$	$70$	$7$
$8$	$81$	$10$	$80$	$-1$
$9$	$101$	$10$	$90$	$-11$
$10$	$123$	$10$	$100$	$-23$

Profit maximising level of output is $5$ units, because here, the difference between total revenue and total cost (i.e., profit) is maximum which is equal to $12$.