Final answer:
A firm maximizes profit by producing the quantity of output at which the difference between total revenue and total cost is the largest. Examples provided indicate highest profits at outputs between 70 and 80, with profit values of $90 or $56 depending on the scenario.
Step-by-step explanation:
To identify the profit-maximizing level of output, a firm must calculate the quantity of output where total revenue (TR) minus total cost (TC) equals the highest profit. The maximum profit is achieved when the gap between total revenue and total cost is the largest. In one provided example, at Q = 60, TR is 240 and TC is 165, resulting in a profit of 75. However, the highest profit in the example is at an output level between 70 and 80, where profit reaches $90. In another scenario, maximum profit occurs at an output between 70 and 80 with a profit of $56. This illustrates how firms, whether perfectly competitive or monopolistic, use their total revenue and total cost information to make decisions that maximize profits.