The value of TR, MR, MC and profit maximizing level of output. Find the variable costs and the level of producing output.

Question

Your business, which has some market power, has the following demand (D), marginal revenue (MR), marginal cost (MC), and average cost (AC) curves. Move point E to label the profit-maximizing price and quantity for your firm. If the goal of your business is to maximize profit, how much will it produce, and what price will it charge? -The business will exit the market because it is unable to cover its average costs. -The business will produce 40 units, and charge a price of $5. -The business will produce 30 units, and charge a price of $3. -The business will produce 30 units, and charge a price of $6.

Answer 1

Question

Chapter 23, Problem 11E

To determine

To calculate:

The value of TR, MR, MC and profit maximizing level of output. Find the variable costs and the level of producing output.

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Your business, which has some market power, has the following demand (D), marginal revenue (MR), marginal cost (MC), and average cost (AC) curves. Move point E to label the profit-maximizing price and quantity for your firm. If the goal of your business is to maximize profit, how much will it produce, and what price will it charge? -The business will exit the market because it is unable to cover its average costs. -The business will produce 40 units, and charge a price of $5. -The business will produce 30 units, and charge a price of $3. -The business will produce 30 units, and charge a price of $6.

Consider total cost and total revenue given in the following table: Quantity 0 1 2 3 4 5 6 7 Total cost $8 8 10 11 13 19 27 37 Total revenue $0 8 16 24 32 40 48 56 a. Calculate profit for each quantity. How much should the firm produce to maximize profut ?b. Calculate marginal revenue and marginal cost for each quantity. Graph them. (Hint: Put the points between whole numbers. For example, the marginal cost between 2 and 3 should be graphed at ) At what quantity do these curves cross? How does this relate to your answer to part (a)?c. Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?

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