Question

Loggins Turtleneck is a company in a perfectly competitive market. (6 pts) Complete the table Output...

Loggins Turtleneck is a company in a perfectly competitive market. (6 pts)

Complete the table

Output

Total Revenue

Total Costs

Total Profit

Marginal Revenue

Marginal Cost

0

0

15

0

1

30

10

2

55

3

90

4

135

5

190

6

255

What is the optimal quantity of output the firm should produce

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Homework Answers

Answer #1

As profit = TR -TC we have the TR column for unit 1 as TR = TC + profit = 40

As TR = P*Q thus P = 40 for all units because at unit 1 P*Q = 40

MR = TRn - TRn-1 we have MR by subtracting TR at next unit level to previous unit level

Sinilarly MC = TCn - TCn-1 we have MC by subtracting TC at next unit level to previous unit level

The firm should choose to produe 3 units because its profit is maximum at 3 units.

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