how do I calculate total revenue and total economic profit for a pizza shop at each rate output
You probably have a demand function or table, which shows price (P) and the quantity demanded (Q). Total revenue is simply P*Q. You also probably have some supply function or table, which shows the average and/or marginal costs of producing each level of Q. Average cost*Q = total costs. Profit is simply total revenue less total costs. (Be careful; accounting profits are not the same as economic profits; economic profits account for the opportunity costs of running the business).
To calculate the total revenue and total economic profit for a pizza shop at each rate of output, you would need to consider a few factors. Here is a step-by-step approach:
1. Determine the price of each pizza: This could be the menu price or the average price you charge per pizza.
2. Calculate the quantity of pizzas sold at each rate of output: The rate of output refers to the number of pizzas produced and sold within a given time period. Determine the quantity of pizzas sold at each rate of output. For example, if the rate of output is 10 pizzas per hour and the shop operates for 8 hours, the quantity sold would be 10 * 8 = 80.
3. Calculate the total revenue: Multiply the price of each pizza by the quantity sold at each rate of output. This will give you the total revenue generated. For example, if the price of each pizza is $10 and you sold 80 pizzas, then the total revenue would be $10 * 80 = $800.
4. Calculate the total cost: Determine the total cost of production for each rate of output. This includes the cost of ingredients, labor, overhead, etc. If you have the total cost, proceed to the next step. Otherwise, break down the different costs and add them up.
5. Calculate the total economic profit: Subtract the total cost from the total revenue at each rate of output. This will give you the total economic profit (or loss). For example, if the total cost is $600, then the total economic profit would be $800 - $600 = $200.
By following these steps, you can calculate the total revenue and total economic profit for a pizza shop at each rate of output.