Aa Aa Suppose Eileen runs a small business that manufactures shirts. Assume that

Question

Aa Aa Suppose Eileen runs a small business that manufactures shirts. Assume that the market for shirts is a perfectly competitive market and the market price is $20 per shirt. The following table represents Eileen's cost structure per hour: Quantity Total Cost (TC) 20 35 40 45 2 3 4 5 6 70 95 125 If Eileen produces and sells two shirts, her total revenue (TR) would be , and her profit would be . Eileen's marginal revenue (MR) from the second shirt she sells is and her marginal cost (MC) of producing a second shirt is

Explanation / Answer

if Eileen produces and sells two shirts, her total revenue(TR) would be 40, and her profit would be 0 . Eileen's marginal revenue(MR) from the second shirt she sells is 20 and her marginal cost of producing a second shirt is 5.

TR= p*Q= 20*2= 40

TC at Q=2 =40

so profit= TR-TC=0

MR for q=2 = 20   as price is constant, MR=price

MC =TC at Q=2 - TC at Q=1

      =40-35 =5

if Eileen produces and sells two shirts, her total revenue(TR) would be 40, and her profit would be 0 . Eileen's marginal revenue(MR) from the second shirt she sells is 20 and her marginal cost of producing a second shirt is 5.

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