I am trying to calculate profit. If I am given the total revenue of $21,000,000. There are not fixed or variable costs. There is a constant marginal cost of $1,000.00.
Would my profit still be the total revnue of $21,000,000?
First of all, you cannot have a positive marginal cost and zero variable costs. If MC=1000 per unit and is constant, then Average Variable cost (AVC) = 1000, and TVC = Q*1000.
You need more information to calculate profit. Do you have total output? In which case you could assume fixed costs are zero.
I am working Ooligopoly. The following is the information and the problem has more then on question to it. I was on the part of the question; If the countries split the market evenly, what would be South Africa’s production and profit?
I know they would production outcose would be for a monopoly. This would be at the quantity of 6,000. I calculated that it sould be $7,000 X 3000 (half)=$21,000,000. I was not sure what to do with the marginal cost in the calculation?
Question:
A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $1,000 per diamond, and the demand for diamonds is described by the following schedule:
Price_______Quantity
$8,000---------5,000
7,000----------6,000
6,000----------7,000
5,000----------8,000
4,000----------9,000
3,000----------10,000
2,000----------11,000
1,000----------12,000
If Russia and South Africa formed a cartel what would be price and quantity? If the countries split the market evenly, what would be South Africa’s production and profit? What would happen to South Africa’s profit if it increased its production by 1,000 while Russia stuck to the cartel agreement?
To calculate profit, you need to subtract the total cost from the total revenue. In this case, since there are no fixed or variable costs, the only cost you have is the constant marginal cost of $1,000.00 per unit.
Since the marginal cost is constant, we need to determine the number of units sold in order to calculate the total cost. To find the number of units, divide the total revenue by the marginal cost per unit:
Number of Units = Total Revenue / Marginal Cost
Number of Units = $21,000,000 / $1,000 = 21,000 units
Now that we know the number of units, we can calculate the total cost by multiplying the number of units by the marginal cost per unit:
Total Cost = Number of Units * Marginal Cost
Total Cost = 21,000 units * $1,000 = $21,000,000
Finally, to find the profit, subtract the total cost from the total revenue:
Profit = Total Revenue - Total Cost
Profit = $21,000,000 - $21,000,000 = $0
Therefore, in this case, your profit would be $0 because the total revenue is equal to the total cost.