Sophia grows Christmas trees. Her cost of production is shown in the table below

Question

Sophia grows Christmas trees. Her cost of production is shown in the table below.

Christmas Trees

Total Cost

1

$6060

2

$9090

3

$162162

4

$246246

5

$342342

6

$450450

7

$570570

Suppose the market for Christmas trees is perfectly competitive and that the market price for Christmas trees is $114 per tree.

How many Christmas trees should Sophia grow?

Sophia should grow

nothing

trees. (Enter your response as an integer value.)

What is Sophia's profit?

Sophia's profit is

$nothing .

(Enter your response to the nearest dollar.)

Christmas Trees

Total Cost

1

$6060

2

$9090

3

$162162

4

$246246

5

$342342

6

$450450

7

$570570

Explanation / Answer

Sophia should sell till the point where Marginal Cost is less than marginal Revenue
Marginal cost is calculated in the following table

So Sophia should produce 6 trees, so that her profit is maximum at $234

Trees Cost Marginal Cost Revenue Profit 1 60 60 114 54 2 90 30 228 138 3 162 72 342 180 4 246 84 456 210 5 342 96 570 228 6 450 108 684 234 7 570 120 798 228

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