BaguettesPrice Total cost MarginalTotalMarginal sold per hour(P) (TC)cost (MC) r

Question

BaguettesPrice Total cost MarginalTotalMarginal sold per hour(P) (TC)cost (MC) revenue revenue IR 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 S3.00 7.00 10.00 12.50 14.50 6.00 17.00 18.50 21.00 a) Fill in the missing values in the table. b) Anna's goal is to maximize profits. How many baguettes should she sell per hour? What price should she charge? c) How much profit will she make? d) What is the marginal revenue Anna receives from selling the profit-maximizing quantity of baguettes? e) What is the marginal cost of producing the profit-maximizing quantity of baguettes?

Explanation / Answer

TR = P x Q

MC (nth unit) = TC (n units) - TC ((n-1) units)

MR (nth unit) = TR (n units) - TR ((n-1) units)

b)

In order to maxmize profits, MR = MC

Q = 5 and P = $3.5

c) Profit = TR - TC = $1.5

d) MR = $1.5

e) MC = $1.5

Q P ($) TC ($) MC ($) TR ($) MR ($) 0 6 3 0 1 5.5 7 4 5.5 5.5 2 5 10 3 10 4.5 3 4.5 12.5 2.5 13.5 3.5 4 4 14.5 2 16 2.5 5 3.5 16 1.5 17.5 1.5 6 3 17 1 18 0.5 7 2.5 18.5 1.5 17.5 -0.5 8 2 21 2.5 16 -1.5

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