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July 29, 2014

July 29, 2014

Posted by **sara** on Monday, January 26, 2009 at 1:37pm.

quantity total cost total revenue

0 $8 0

1 $9 8

2 $10 16

3 $11 24

4 $13 32

5 $19 40

6 $27 48

7 $37 56

a. Calculate profit for each quantity. How much should the firm produce to maximize profit?

b. Calculate marginal revenue and marginal cost for each quantity. Graph them. (Hint: Put the points between whole numbers. For example, the marginal cost between 2 and 3 should be graphed at 2 1/2.)

At what quantity do these curves cross? How does this relate to your answer to part (a)?

c. Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?

- microeconomics -
**sara**, Monday, January 26, 2009 at 1:41pmplease i need your help ^_^

quantity 0 1 2 3 4 5 6 7

total cost 8 9 10 11 13 19 27 37

total revenue 0 8 16 24 32 40 48 56

- microeconomics -
**economyst**, Monday, January 26, 2009 at 3:32pmAn Excel spreadsheet is very helpful for these kinds of problems.

Always always always, maximize where MC=MR.

So calculate marginal cost and marginal revenue schedules. Going from 0 to 1 unit, costs went from 8 to 9, so MC here is 1. (Take the hint and MC at 1/2 is 1). Going from 0 to 1 unit, total revenues went from 0 to 8, so TR is 8.

Repeat for the remaining units of production -- find where MC=MR.

c) Since MR is constant, the firm must be in a competitive industry. I dont think there is enough info to determine whether the industry in in a long-run equilibrium

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