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Do Homework-Tytianna Corbett-Pargo- Microsoft Edge 3 https/www.mathxd.com/Student/PlayerHomeworkaspx?homeworkld 497108022Bequestionld 1flushed-falsel ECN360-825A Homework: Chapters 22 and 23 score: 0 of 1 pt Text Problem 23-4c . 23 of 33 (16 complete) > V Score: 40.01%, 13.2 of Question Help 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 $12. 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 Total Hourly Total and Sales of Pizzas Cost (S) Revenue (S) Total Economic Marginal Profit (S) Cost (5) Marginal Revenue (5) 10 12 13 15 19 25 12 12 12 12 12 12 12 12 12 12 12 24 12 23 48 60 72 84 96 108 120 41 47 51 53 43 10 12 16 10 71 49 Based on marginal analysis, what is the pr ofit-maximizing rate of output for the poza shop? pizzas ! .. I-./ì | :/ì 1. II (L.) More nter your answer in the answer box and then click Check Answer. ll parts showing Clear All Final Check 10:44 PM 9/17/2018

Explanation / Answer

Consider the given problem here the market for pizza is “perfectly competitive” with market price “P=$12”. Now, Total Revenue is the product of “P=price” and “Q=output” and “MC” is the difference between “cost for q=n” to “cost for q=n-1”. Similarly, “MR” is the difference between “revenue for q=n” to “revenue for q=n-1”. Now, the “MC” and “MR” for all the level of output is given in the question.

So, here the optimum level of output will be determine by the condition “MR=MC”. Now, if “MR > MC”, => the additional revenue from additional production is more than additional cost, => it is profitable to produce addition one unit. Similarly, if “MR < MC”, => the additional revenue from additional production is less than additional cost, => it is not profitable to produce addition one unit. So, at the optimum output “MR” must be equal to “MC”.

So, here for “q=9” the “MC” and “MR” are equal, => the optimum output is “q=9”.

So, the profit maximizing output is “q=9”.

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