Chapter 23, Problem 14P

To determine

Consider the firm discussed in question 13. If the firm were to produce the 12^th unit and thereby incur hourly total costs of $65, what would be its marginal cost? Based on this answer and your answers

to question 13, would producing 12 units maximize the firm’s profits? What would be its hourly economic profits?

Suppose that the firm with the costs and revenues tabulated below is contemplating whether to produce 12 units of output. If it were to produce this many units, what (if anything) would happen to the market price? What would be the firm’s marginal revenue for the 12^th unit produced? What would be the firm’s total revenues per hour?

Concept Introduction:

Marginal cost: The marginal cost is the addition made to total costs by producing one more unit of the commodity. The marginal cost is calculated by dividing the change in total cost from the change in quantity.

Economic profit: The economic profit of a firm is calculated by deducting total revenue from total cost. The total costs consists of both implicit and explicit costs. Explicit cost is the ordinary costs of the firm like rent, salaries to the employees etc. On the other hand implicit cost is also known as imputed cost which is described as the opportunity cost of anything.