Happy Go Lucky Electric Company is the only company providing electric service t

Question

Happy Go Lucky Electric Company is the only company providing electric service to the city of Go Lucky Demonstrate the 5 steps to maximizing profit by moving points A, B, C, and D according to the instructions below Place point A on the marginal cost curve where marginal cost equals marginal revenue 10 9 Marginal Cost Place point B on the x-axis at the output level associated with point A. 7 Avera Total posts Place point C on the average total cost curve at that output level. 5 Place point D on the demand curve at that output level. 3 Use points C and D to determine profit for Happy Go Lucky. Demand O $60 inal Revenue $50 0 0 5 10 15 20 25 30 35 40 45 50 Quantity O $10 O $100

Explanation / Answer

The profits will be where we have total revenue minus total costs. The optimal quantity here is 30, the price is $6 and the total revenue therefore $180. Total cost is thus $120. The profit is thus $60. The correct answer is A.

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