Final answer:
The profit-maximizing quantity is where the gap between total revenue and total costs is the widest, which can be efficiently found using the marginal approach.
Step-by-step explanation:
The profit-maximizing quantity is the level of output at which the difference between total revenue and total cost is the greatest. Total revenue for a perfectly competitive firm is depicted as a straight line with a slope equal to the price of the good, while total cost has a curve that becomes steeper at higher levels of output due to diminishing marginal returns. To determine the most profitable quantity, one must find the quantity where the vertical gap, representing profit, between total revenue and total costs is the largest.
Using the raspberry farm example, profits occur when the output level range is from 40 to 100, as total revenues exceed total costs. Maximum profit is achieved at an output between 70 and 80, where the firm can earn a profit of $90. Through the marginal approach, one can calculate the output that will yield the highest level of profit more efficiently. The marginal approach to profit maximization involves considering the additional revenue and additional cost from producing one more unit, rather than focusing on total values.