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2 July, 05:05

The table shown below gives the short-run total cost function Noel's window cleaning firm. This firm competes in a perfectly competitive market.

Number Of Jobs Completed Total Costs in $$

0 30

1 37

2 48

3 65

4 92

5 129

6 169

Noel's firm charges the market price for window washing jobs, $30/job. At what output will the firm maximize profit? What will that profit be?

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  1. 2 July, 09:04
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    profit maximizing output is 4; $28

    Explanation:

    Noel's firm charges the market price for window washing jobs = $30/job

    Marginal cost for the 5th unit of output:

    = Total cost from 5th unit - Total cost from 4th unit

    = $129 - $92

    = $37

    At 5th level of output, the marginal cost is greater than the market price for window washing jobs.

    Therefore, the profit maximizing output is 4.

    Profit = (market price * output) - Total cost

    = ($30 * 4) - 92

    = $120 - $92

    = $28
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