Class 12 Micro Economics - Chapter The Theory of the Firm under Perfect Competition NCERT Solutions | The following table shows the total cost
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.
| Output | TC (Rs.) |
|---|---|
| 0 1 2 3 4 5 6 7 8 9 10 |
5 15 22 27 31 38 49 63 81 101 123 |
| Quantity Sold |
Price | TC | TR = P x Q | Profit = TR - TC |
|---|---|---|---|---|
| 0 | 10 | 5 | 10x0=10 | 0 - 5 = -5 |
| 1 | 10 | 15 | 10x1=10 | 10 - 15 = -5 |
| 2 | 10 | 22 | 10x2=20 | 20 - 22 = -2 |
| 3 | 10 | 27 | 10x3=30 | 30 - 27 = 3 |
| 4 | 10 | 31 | 10x4=40 | 40 - 31 = 9 |
| 5 | 10 | 38 | 10x5=50 | 50 - 38 = 12 |
| 6 | 10 | 49 | 10x6=60 | 60 - 49 = 11 |
| 7 | 10 | 63 | 10x7=70 | 70 - 63 = 7 |
| 8 | 10 | 81 | 10x8=80 | 80 - 81 = -1 |
| 9 | 10 | 101 | 10x9=90 | 90 - 101 = -11 |
| 10 | 10 | 123 | 10x10=100 | 100 - 123 = -23 |
Profit maximising output is where the difference between TR and TC is the maximum. This exists at 5 units of output, where firm is earning profit of Rs 12.
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