**Answer:**

The firm should capacity "c" since it has the highest expected profit of $58,400.

**Explanation:**

The expected profit of each capacity will be calculated by adding together the multiplication of the profit from each market demand and its probability. The decision is then to the capacity that has the highest expected profit as provided as follows:

a. Expected profit of capacity "a" = ($24,000 × 0.4) + ($54,000 × 0.6) = $9,600 + $32,400 = $42,000.

b. Expected profit of capacity "b" = ($20,000 × 0.4) + ($64,000 × 0.6) = $8,000 + $38,400 = $46,400.

c. Expected profit of capacity "c" = ($2,000 × 0.4) + ($96,000 × 0.6) = $800 + $57,600 = $58,400.

The firm should capacity "c" since it has the highest expected profit of $58,400.