erage Total Tota Cost Maiginal Cost 2.50 50 0.00 8.00 5.00 20 DO Drake sells 1-s

Question

erage Total Tota Cost Maiginal Cost 2.50 50 0.00 8.00 5.00 20 DO Drake sells 1-shirts in a perfectl, compettive market The table above summarizes D ake's output per day (O). total coet (TC),average total cost (ATC) and marginal cost (MC) What will Drake's output be and how much profit wil he earn if the market pree of t shirts s $5. 002 OA. Q:proft $10 C. 3proft-$7.50 ? D. Price and profit cannot be desermined from the information given. s not produce at Click to select your answer ctive and 9-46 PM

Explanation / Answer

Answer is Q =3; Profit = -7.50 Explanation: Price = $ 5, therefore, marginal revenue MR =5 Equilibrium output is at the point where MC=MR i.e. at 3 units At 3 units of output, Total cost = $ 22.50 And total Revenue = 3 units @5 = $ 15 Total profits= TR -TC = 15 -22.50 =   -$ 7.50

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