A. To maximize profits, Maria should sell ____ Loaves of ciabatta bread per hour

Question

A. To maximize profits, Maria should sell ____ Loaves of ciabatta bread per hour.
Maria should charge a price of $ _____
Maria’s maximum profit is $ ________
B. The marginal revenue when selling the profit maximizing number of loaves of ciabatta bread is $ _______.
The marginal cost when selling the profit maximizing number of loaves of ciabatta bread is $ _______. Ciabatta Bread Sold Price (P) Total Cost (TC) $2.50 6.50 9.50 12.00 14.00 15.50 16.50 18.00 20.50 Per Hour (Q) 2 4 6 $6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00

Explanation / Answer

Answer

TC=TVC+TFC
FC=TC-VC
AFC=FC/Q
AVC=VC/Q
ATC=TC/Q
MC of n the unit=(TC of n units -TC of p units )/(n-p)...............n>p

TR=P*Q

MR of n th unit=(TR of n units -TR of p units)/(n-p)...................n>p

profit=TR-TC
The firm produces at MR=MC or the closet lower MC

A. To maximize profits, Maria should sell 5 Loaves of ciabatta bread per hour.
Maria should charge a price of $ 3.5
Maria’s maximum profit is $2
B. The marginal revenue when selling the profit maximizing number of loaves of ciabatta bread is $ 1.5.
The marginal cost when selling the profit maximizing number of loaves of ciabatta bread is $ 1.5.

Price Quantity demanded Total revenue Marginal revenue TC MC Profit 6 0 0 --- 2.5 -122.5 5.5 1 5.5 5.5 6.5 4 -121 5 2 10 4.5 9.5 3 -119.5 4.5 3 13.5 3.5 12 2.5 -118.5 4 4 16 2.5 14 2 -118 3.5 5 17.5 1.5 15.5 1.5 -118 3 6 18 0.5 16.5 1 -118.5 2.5 7 17.5 -0.5 18 1.5 -120.5 2 8 16 -1.5 20.5 2.5 -124.5

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