Suppose Yvonne runs a small business that manufactures shirts. Assume that the m

Question

Suppose Yvonne runs a small business that manufactures shirts. Assume that the market for shirts is a perfectly competitive market, and the market price is $25 per shirt.

The following table represents Yvonne's cost structure per hour:

Quantity (Q) and Total Cost (TC)

0 20

1 40

2 50

3 55

4 65

5 80

6100

7 130

If Yvonne produces and sells three shirts, her total revenue (TR) would be _______ (choices are 0, 20, 50, 35, 75, or 100), and her economic profit would be _______ (choices are 35, 75, 0, 100, 20, or 50). Yvonne's marginal revenue (MR) from the third shirt she sells is ________ (choices are 0, 20, 40, 15, 25, 30, 35, or 10), and her marginal cost (MC) of producing a third shirt is ________ (choices are 10, 15, 5, 0, 55, or 20).

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I need help with these questions, use the information from the Q and TC table to answer the underlined questions with the choices listed. Thank you.

Explanation / Answer

Entering the details in excel:

(a) 75
(b) 20
(c) 25 (this is a horizontal line. PC has a constant MR since each firm has no effect on price. So they only can sell goods for 25 regardless on how much qty they produce.)
(d) 5

Q TC MC TR Profit 0 20 1 40 20 25 -15 2 50 10 50 0 3 55 5 75 20 4 65 10 100 35 5 80 15 125 45 6 100 20 150 50 7 130 30 175 45

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