Given the following table showing total cost and total revenue at different output levels, at which output level does the firm maximize profit?Output (units) | Total Cost | Total Revenue---|---|---1 | 50 | 802 | 90 | 1403 | 130 | 1804 | 180 | 200

• A. At output level 1
• B. At output level 4
• C. At output level 3
• D. At output level 2

Answer: (C)

Verified step by step guidance

1. Calculate the profit at each output level by subtracting total cost from total revenue. Use the formula: \(\text{Profit} = \text{Total Revenue} - \text{Total Cost}\).
2. For each output level, apply the formula: for example, at output level 1, profit is \$80 - 50\(; at output level 2, profit is \)140 - 90$, and so on.
3. Compare the profit values obtained for all output levels to identify which output level yields the highest profit.
4. The output level with the maximum profit is where the firm maximizes its profit.
5. Confirm that this output level corresponds to the highest difference between total revenue and total cost in the table.