Question

1. You decide to raise chickens to sell eggs for $0.30 each. Complete the chart .

HOW MANY EGGS SHOULD YOU PRODUCE AND SELL? _________

Output	TC	FC	VC	ATC	MC	Profit
0 eggs		$10	$ 0	--	--
10 eggs			1
20 eggs			4
30 eggs			8

Answer 1

Ans:

Output ( eggs)	TC	FC	VC	ATC	MC	Profit ( $)
0	$10	$10	$0	--	--	-10
10	11	10	1	$1.10	$0.10	-8
20	14	10	4	0.7	0.3	-8
30	18	10	8	0.6	0.4	-9

You should purchase and sell 20 eggs.

Explanation:

TC = FC + VC

ATC = TC / Quantity of output

MC = Change in TC / Change in Q

Profit = Total revenue - Total cost

Total revenue = Price * Quantity

Under perfect competition , the profit maximization or loss minimization condition is where price equals marginal cost ( P = MC)