Based on the following table, answer questions 4 and 5: 4.The table represents t

Question

Based on the following table, answer questions 4 and 5:

4.The table represents the total revenues and total costs of a local sub shop. Based on the table, whatis the marginal revenue generated from producing the second sub?

a.$5

b.$10

c.$15

d.$35

5.Based on the table, how many subs should the store produce to maximize profits?

a.1

b.2

c.3

d.4

6.If Tom sells 500 sandwiches for $7 and at 500 sandwiches has an average cost of $5 and marginal

cost of $6, what is his profit?

a.$500

b.$1,000

c.$2,500

d.$3,500

ng table, answer questions 4 and 5: Quantity Produced Total Revenue Total Costs O 10 -- en 20 35 21 S 30 40 50

Explanation / Answer

Answer

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

Q=3 units and P=$45

Q4

Answer

MR(2)=35-20=$15

option c

Q5

Answer

Option c

3 subs

Q6

Answer

Option b

Profit=(P-ATC)*Q=(7-5)*500=$1000

Q TR TC MR MC 0 0 0 1 20 10 20 10 2 35 21 15 11 3 45 30 10 9 4 50 40 5 10

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