Let's solve each part step by step: --- ### **a) Complete the profit column** **Profit (π) = Total Revenue (TR) - Total Cost (TC)** | Quantity (Q) | Total Cost (TC) | Total Revenue (TR) | Profit (π = TR - TC) | |--------------|-----------------|--------------------|----------------------| | 0 | 400 | 0 | 0 - 400 = **-400** | | 1 | 700 | 500 | 500 - 700 = **-200** | | 2 | 900 | 1000 | 1000 - 900 = **100** | | 3 | 1200 | 1500 | 1500 - 1200 = **300**| | 4 | 1600 | 2000 | 2000 - 1600 = **400**| | 5 | 2100 | 2500 | 2500 - 2100 = **400**| | 6 | 2900 | 3000 | 3000 - 2900 = **100**| --- ### **b) Find the profit-maximizing quantity and explain why.** **Profit-maximizing quantity** is where profit (π) is highest. From the table, the highest profit is **400** at **Q = 4 and Q = 5**. - At Q = 4, π = 400 - At Q = 5, π = 400 Both Q = 4 and Q = 5 yield the same maximum profit, so **either 4 or 5 units** is profit-maximizing. In perfect competition, the firm will be indifferent between these quantities. **Why?** A firm maximizes profit by producing the quantity where the difference between TR and TC is greatest (i.e., where profit is maximized). --- ### **c) Given this profit level, what will happen in the long run?** - Since the firm is earning **positive economic profit** (π > 0), new firms will be attracted to the industry. - **Entry of new firms** will increase market supply, causing the market price to fall. - This process continues until **economic profit is zero** (normal profit), meaning TR = TC. - In the **long run**, firms in a perfectly competitive market earn **zero economic profit**. --- ## **Summary Table** | Quantity (Q) | Total Cost (TC) | Total Revenue (TR) | Profit (π) | |--------------|-----------------|--------------------|------------| | 0 | 400 | 0 | -400 | | 1 | 700 | 500 | -200 | | 2 | 900 | 1000 | 100 | | 3 | 1200 | 1500 | 300 | | 4 | 1600 | 2000 | 400 | | 5 | 2100 | 2500 | 400 | | 6 | 2900 | 3000 | 100 | --- **Final answers:** - a) Profit column completed above. - b) Profit-maximizing Q is **4 or 5 units**, because profit is maximized at these quantities. - c) In the long run, economic profit attracts entry, price falls, and profit goes to zero.