QTY PRICE TOTAL REVENUE TOTAL COST PROFIT/LOSS 0 1 2 3 4 5 6 7 8 9 10 PRICE: $70
ID: 1191495 • Letter: Q
Question
QTY
PRICE
TOTAL
REVENUE
TOTAL COST
PROFIT/LOSS
0
1
2
3
4
5
6
7
8
9
10
PRICE: $700
PRICE: $1000
QTY
FC
VC
TC
AFC
AVC
ATC
MC
MR (1)
MR (2)
0
1000
1
2000
2
2800
3
3500
4
4000
5
4500
6
5200
7
6000
8
7000
9
9000
Fill in the table above. Answer the 3 questions using the marginal revenue/marginal cost approach.
Use the prices given above
1. Would you produce?
2. How many will you produce?
3. What is your economic profit/loss?
QTY
PRICE
TOTAL
REVENUE
TOTAL COST
PROFIT/LOSS
0
1
2
3
4
5
6
7
8
9
10
PRICE: $700
PRICE: $1000
QTY
FC
VC
TC
AFC
AVC
ATC
MC
MR (1)
MR (2)
0
1000
1
2000
2
2800
3
3500
4
4000
5
4500
6
5200
7
6000
8
7000
9
9000
Fill in the table above. Answer the 3 questions using the marginal revenue/marginal cost approach.
Use the prices given above
1. Would you produce?
2. How many will you produce?
3. What is your economic profit/loss?
Explanation / Answer
The second table are filled first.
MR1=700, MR2=1000
Since for the first one price is $700 and every unit suffers loss P=AVC minimum is the point till which he will produce, i.e. 6th unit. For the second case he will maximise profit and sales, i.e. 8th unit. At 8th unit economic it will earn a profit of $1000. At 8th unit MR=MC=1000.
QTY FC VC=TC-FC TC AFC=FC/Q AVC=VC/Q ATC=TC/Q MC=TCK+1-TCK 1 1000 1000 2000 1000 1000 2000 2 1000 1800 2800 500 900 1400 800 3 1000 2500 3500 333.33 833.33 1166.66 700 4 1000 3000 4000 250 750 1000 500 5 1000 3500 4500 200 700 900 500 6 1000 4200 5200 166.66 700 866.66 700 7 1000 5000 6000 142.85 714.28 857.14 800 8 1000 6000 7000 125 750 875 1000 9 1000 8000 9000 111.11 888.88 1000 2000Related Questions
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