1. Fill in the table below. (4 points) Output Price TR MR TC MC 0 700 0 --------
ID: 2443610 • Letter: 1
Question
1. Fill in the table below. (4 points)
Output
Price
TR
MR
TC
MC
0
700
0
-----------
100
------------
1
700
300
2
700
600
3
700
1000
4
700
1500
5
700
2200
6
700
3400
a. What is the profit maximizing output level? (2 points)
b. What is the profit per unit (Price –ATC)? Show all necessary work. (3 points)
c. What is economic profit? Show all necessary work. (3 points)
Output
Price
TR
MR
TC
MC
0
700
0
-----------
100
------------
1
700
300
2
700
600
3
700
1000
4
700
1500
5
700
2200
6
700
3400
Explanation / Answer
A.
Profit maximizing level of output is 5 unit, because at this level of output, MR = MC = 700
B.
At 5 unit of output level,
Profit per unit = 700 - 2200/5 = $260
C.
Economic profit = total revenue – total cost = 5*700 -2200
Economic profit = 1300
Output Price TR MR TC MC 0 700 0 ----------- 100 ------------ 1 700 700 700 300 200 2 700 1400 700 600 300 3 700 2100 700 1000 400 4 700 2800 700 1500 500 5 700 3500 700 2200 700 6 700 4200 700 3400 1200Related Questions
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