Q | P | TR | MR | TC | MC |
0 | 10 | ---- | 4 | ||
1 | 9 | 8 | |||
2 | 8 | 11 | |||
3 | 7 | 13 | |||
4 | 6 | 14 | |||
5 | 5 | 16 | |||
6 | 4 | 19 | |||
7 | 3 | 24 | |||
8 | 2 | 30 |
What profit should this firm be earning?
Profit =$10
TR=P*Q
TR(1)=9*1=9, TR(2)=8*2=16 and so on
MR(n)=(TR(n)-TR(p))/(n-p)
MR(n)= MR of n th unit of output
TR(n)=TR of n units of output
TR(p)=TR of p units of output
it is true for n>p
MR(1)=(9-0)/(1-0)=9, MR(2)=(16-9)/(2-1)=7 and so on
MC(n)=(TC(n)-TC(p))/(n-p)
MC(n)=marginal cost of n th unit
TC(n)=Total cost of n units of output
TC(p)=Total cost of p unit of output
here, n>p.
MC(1)=(8-4)/(1-0)=4, MC(2)=(11-8)/(2-1)=3 and so on
Profit =TR-TC
Profit(0)=0-4=-4 and so on
Q | P | TR | MR | TC | MC | Profit |
0 | 10 | 0 | ---- | 4 | -4 | |
1 | 9 | 9 | 9 | 8 | 4 | 1 |
2 | 8 | 16 | 7 | 11 | 3 | 5 |
3 | 7 | 21 | 5 | 13 | 2 | 8 |
4 | 6 | 24 | 3 | 14 | 1 | 10 |
5 | 5 | 25 | 1 | 16 | 2 | 9 |
6 | 4 | 24 | -1 | 19 | 3 | 5 |
7 | 3 | 21 | -3 | 24 | 5 | -3 |
8 | 2 | 16 | -5 | 30 | 6 | -14 |
The firm produces at MR=MC or the nearest lower MC
where
Q=4 units and Profit =$10, P=6
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