b,c PART II: SHORT-ANSWER QUESTIONS (60 points) Read the question and given info

Question

b,c

PART II: SHORT-ANSWER QUESTIONS (60 points) Read the question and given information carefully. Show all necessary steps and reasoning that lead to the answers. Question1 Table 14-2 The following table presents cost and revenue information for Soper's Port Vineyard. COSTS REVENUES Marginal Revenue Revenue Total Quantity Produced Total Marginal Quantity Cost 100 150 202 257 317 385 465 562 682 Price 120 120 Cost Demanded 0 120 120 120 120 120 a. (40 points) Refer to Table 14-2. Fill out the columns of "Marginal Cost", "Marginal Revenue" and "Total Revenue"

Explanation / Answer

b. The profit maximizing output is the one where the marginal cost is equal to the marginal revenue. From the table above , this is reached where the producer produced 7 units. Thus the profit maximizing output is 7 units.

c.The economic profit can be calculated by substracting the toal revenue fom the total cost incurred by the producer at the profit maximizing level of output.

At 7 units

TR=840

TC=562

Economic Profit = TR-TC = 840-562

                        =278

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