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Using Table 8.1 in the source, at which output levels does the raspberry farm make losses rather than profits?
ANo output level results in a loss
BLevels 0 to 40, and 90 to 100 again
COutput levels from 50 to 80 only
DEvery output level from 0 to 100
Answer & Solution
Correct answer: B. Levels 0 to 40, and 90 to 100 again
1. Table 8.1 compares total revenue and total cost at each output level from 0 to 100.
2. From 0 to 40 units, total cost exceeds total revenue, so the firm loses money.
3. From 50 to 80 units, total revenue exceeds total cost, so the firm earns profit.
4. At 90 and 100 units, total cost exceeds total revenue again, so the firm returns to making losses.
5. Profits are therefore not present at every output level, ruling out any option that claims profit throughout.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.2 | How Perfectly Competitive Firms Make Output Decisions_
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