Chapter 9, Problem 10P

To determine

To answer:

The questions based on the table

Concept Introduction:

Total profit: The total profit is the difference between the total benefit and total cost.

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Explanation of Solution

Quantity of diamonds	Total benefit	Marginal benefit	Total cost	Marginal cost
		-		-

1. In the marginal cost and marginal benefit curves are given in the above graph the intersection of the marginal benefit and marginal cost curve is the equilibrium so at the equilibrium the quantity of diamond is so it is considered as the optimal quantity to be produced.

Quantity of diamonds	Total benefit	Total cost	Total profit
			-

2. The fourth column of the above table represents the total profit of the firm; the total profit is the difference between total benefit and total cost the company can earn the highest profit at which the fifth quantity is produced.