The table below represents the hourly output and cost structure for a local pizz

Question

The table below represents the hourly output and cost structure for a local pizza shop. The market is perfectly competitive, and the market price of a pizza in the area is $10. Total costs include all implicit opportunity costs. Calculate the pizza shop's marginal cost and marginal revenue at each rate of output and fill in the values in the table.

Total Hourly Output and Sales of Pizzas Total Hourly cost Total Revenue Total Economic Profit Marginal Cost Marginal Revenue

0 6 0 0 --- ---

1 10 10 0

2 12 20 8

3 13 30 17

4 15 40 25

5 19 50 30

6 25 60 35

7 33 70 37

Explanation / Answer

Marginal cost is the addition to the total cost and is computed for each level of output. Marginal revenue is the addition to the total revenue for each output change.

Hourley output Total cost Total revenue Total profit Marginal cost Marginal revenue 0 6 0.00 -6.00 1 10 10.00 0.00 4.00 10.00 2 12 20.00 8.00 2.00 10.00 3 13 30.00 17.00 1.00 10.00 4 15 40.00 25.00 2.00 10.00 5 19 50.00 31.00 4.00 10.00 6 25 60.00 35.00 6.00 10.00 7 33 70.00 37.00 8.00 10.00

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