Question

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?

Answer 1

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