4. Consider the total cost and total revenues of Hermione\'s Healthy Hamburger H

Question

4. Consider the total cost and total revenues of Hermione's Healthy Hamburger Haven (HHHH for short) from making and selling various quantities of hamburgers. Number of Hamburgers Total Cost Total Revenues 12 34 $20 $22 $24 $26 $30 $42 $58 $78 So $20 $40 $60 $80 $100 $120 $140 567 A) What is the price of a hamburger? B) What is the fixed cost of HHHH? C) What are the variable costs of HHHH? D) Calculate the Marginal Revenue and Marginal Cost for each number of hamburgers, and show below. E) How many hamburgers should HHHH make to earn maximum profit? Explain your answer?

Explanation / Answer

Answer

TC=TVC+TFC

FC=TC-VC

AFC=FC/Q

AVC=VC/Q

ATC=TC/Q

MC of n the unit=(TC of n units -TC of p units )/(n-p)...............n>p

TR=P*Q

MR of n th unit=(TR of n units -TR of p units)/(n-p)...................n>p

profit=TR-TC

The firm produces at MR=MC or the closet lower MC

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a)What is the price of a hamburger?

Price=TR/Q=20/1=20=40/2=20

the price is $20

b)What is the fixed cost of HHHH?

Fixed cost is cost at zero output=$20

c) Variable cost is calculated in the table

d)

Calculate the Marginal Revenue and Marginal Cost for each number of hamburgers, and show below.

MR=price=$20 because price is constant

MC is calculated in the table
e)

How many hamburgers should HHHH make to earn the maximum profit? Explain your answer?

Q=6

because MC=MR at this quantity, this is the profit maximizing condition.

Q 0 1 2 3 4 5 6 7 TC 20 22 24 26 30 42 58 78 TR 0 20 40 60 80 100 120 140 VC 0 2 4 6 10 22 38 58 MC 2 2 2 4 12 16 20 8.29 MR 20 20 20 20 20 20 20 20 Profit -20 -2 16 34 50 58 62 62

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