Q2 Frances sells earrings in the perfectly competitive earring market. Her outpu
ID: 1216863 • Letter: Q
Question
Q2
Frances sells earrings in the perfectly competitive earring market. Her output per day and costs are seen in the table to the right. If the current equilibrium price in the earring market is $1.70, what price will Frances charge? $1.15 $2.00 $5.00 $1.70 Find the correct quantities for the missing values in the table, as represented by (i, ii, iii, and iv; enter all values as dollars and cents). Marginal revenue is $. Total revenue is $. Marginal revenue is $. Total revenue is $. What quantity of earrings will maximize Frances' profit? earrings.Explanation / Answer
a.) The price of the firm will be 1.70
b.)
ii)Total revenue = 4 * 1.70 = 6.8
i.) Therefore marginal revenue = change in revenue = 6.8 - 5.10 = 1.7
iv) Total revenue = 7 *1.70 = 11.9
iii.) Marginal revenue = 11.9 -10.20=1.7
C.) At 6 units of output profit is maximized . Profit = 1.7 * 6 - 6.25 = 3.95
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