Question

# Q P TR MR TC MC 0 10 ---- 4 1 9 8 2 8 11...

 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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