Question

Using the table below, what is the total profit when the firm is producing at operational efficiency?

Y	P ($)	TR ($)	MR ($)	TC ($)	ATC ($)	MC ($)
Output	Price	Total Revenue	Marginal Revenue	Total Cost	Average Total Cost	Marginal Cost
1	20			20
2	19			30
3	18			38
4	17			48
5	16			62
6	15			84
7	14			117
8	10			168

Answer 1

Output	Price	Total Revenue = P x Q	MR = Change in TR/Change in Output	TC	ATC =TC/Output	MC	Profit = TR- TC
1	20	20	20	20	20	20	0
2	19	38	18	30	15	10	8
3	18	54	16	38	12.66	8	16
4	17	68	14	48	12	10	20
5	16	80	12	62	12.4	14	18
6	15	90	10	84	14	22	6
7	14	98	8	117	16.71	33	-19
8	10	80	-10	168	21	51	-88

Operational efficiency is where the firm is producing at minimum average total cost. Lowest ATC is 12 at output 4.

At this output level the profit is $20

answered by: anonymous