find the revenue-maximizing solution Output in Gallons Price/Gallon Total Cost M
ID: 1197910 • Letter: F
Question
find the revenue-maximizing solution
Output in Gallons
Price/Gallon
Total Cost
MC = Change in Total Cost / Change in Total Output
Total Revenue - Output price
MR = Change in Total Revenue / Change in Total Output
Profit = Total Revenue - Total Cost
50,000
$0.28
$6,000
14,000
8,000
100,000
0.26
15,000
0.18
26,000
$0.24
11,000
150,000
0.22
22,000
0.14
33,000
0.14
11,000
200,000
0.20
32,000
0.2
40,000
0.14
8,000
250,000
0.16
24,000
0.28
40,000
0
16,000
300,000
0.12
64,000
0.36
36,000
($0.08)
-28,000
Output in Gallons
Price/Gallon
Total Cost
MC = Change in Total Cost / Change in Total Output
Total Revenue - Output price
MR = Change in Total Revenue / Change in Total Output
Profit = Total Revenue - Total Cost
50,000
$0.28
$6,000
14,000
8,000
100,000
0.26
15,000
0.18
26,000
$0.24
11,000
150,000
0.22
22,000
0.14
33,000
0.14
11,000
200,000
0.20
32,000
0.2
40,000
0.14
8,000
250,000
0.16
24,000
0.28
40,000
0
16,000
300,000
0.12
64,000
0.36
36,000
($0.08)
-28,000
Explanation / Answer
Revenue will be maximisised where MR =0
Revenue maximising solution is thus : 250,000 gallons of output
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