In the following link, please determine the profit-maximizing output for the firm.http://postimage.org/image/d8ywdr6p3/

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The data from the table in your link show us that the profit-maximizing output for the firm is 500 kg.  This can be determined in two ways.  

First, there is the total revenue - total cost method.  Here, we simply subtract total cost from total revenue.  Wherever the difference is greatest, we have the profit maximizing point.  When the firm produces 500 kg its total revenues are $240 and its total costs are $145.  This gives a profit of $95.  This is the greater than the profit at any other level of output.

Second, there is the marginal revenue = marginal costs method.  Here, we find the output level at which marginal revenue is closest to marginal costs (without being lower than marginal costs).  Again, 500 kg is the level of output.  There, the marginal cost is $39.  Marginal revenue is $48 for all increments of 100 kg of output.  By the time that the firm produces 600 kg, the marginal cost is $54, which is greater than the marginal revenue.

Therefore, the profit-maximizing output for the firm is 500 kg.

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