$320

$296

$360

$400

$400

$550

$440

$715

$480

Profit

−$62

−$50

−$30

−$6

$22

$50

$75

$90

$90

$64

$0

$−110

$−235

TABLE 8.1 Total Cost and Total Revenue at the

Raspberry Farm

Based on its total revenue and total cost curves, a perfectly competitive firm like the raspberry farm can

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8.2 • How Perfectly Competitive Firms Make Output Decisions 191

calculate the quantity of output that will provide the highest level of profit. At any given quantity, total revenue

minus total cost will equal profit. One way to determine the most profitable quantity to produce is to see at

what quantity total revenue exceeds total cost by the largest amount. Figure 8.2 shows total revenue, total cost

and profit using the data from Table 8.1. The vertical gap between total revenue and total cost is profit, for

example, at Q = 60, TR = 240 and TC = 165. The difference is 75, which is the height of the profit curve at that
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