Question

# Suppose you are given the following table: Output Price Total Cost Total Revenue Marginal Revenue Marginal...

Suppose you are given the following table:

 Output Price Total Cost Total Revenue Marginal Revenue Marginal Cost Average Total Cost Profit/ Loss (P-ATC) 0 150 100 1 138 150 2 125 184 3 113 208 4 100 227 5 88 250 6 75 280 7 63 318 8 50 366 9 38 425 10 25 500

a. Determine the optimum /profit maximizing point using the MR-MC Principle

b. At this point, what are the total profits?

c. Calculate (Price - A.T.C.) at each unit level of output. At what point is this difference at a maximum?

d. Trace the demand and M.R. curves. How would you describe this relationship?

 Output Price Total Cost Total Revenue Marginal Revenue Marginal Cost Average Total Cost Profit/ (P-ATC) Loss 0 150 100 0 0 -100 1 138 150 138 138 50 150 -12 -12 2 125 184 250 112 34 92 66 33 3 113 208 339 89 24 69.333 131 43.66667 4 100 227 400 61 19 56.75 173 43.25 5 88 250 440 40 23 50 190 38 6 75 280 450 10 30 46.667 170 28.33333 7 63 318 441 -9 38 45.429 123 17.57143 8 50 366 400 -41 48 45.75 34 4.25 9 38 425 342 -58 59 47.222 -83 -9.222222 10 25 500 250 -92 75 50 -250 -25

a) the point where MR-MC is minimum gives the maximum profit. that is at an output level of 5.

b) At this point, total profit is 190

C) At 3 units of output.

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