Total Hourly Output and Sales of Pizzas: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10
Total Hourly Cost ($): 3, 7, 9, 10, 12, 16, 22, 30, 40, 52, 68
Total Revenue ($): 0, 10, 20, 30, 40, 50, 60, 70, 80, 90, 100
Economic Profit ($): 0, 3, 11, 20, 28, 34, 38, 40, 40, 38, 32
Marginal Cost ($):blank, 4, 2, 1, 2, 4, 6, 8, 10, 12, 16
Marginal Revenue ($): blank, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10
Based on marginal analysis, what is the profit-maximizing rate of output for the pizza shop?---pizzas.
The profit-maximizing rate of output for the pizza shop is 6 pizzas.
Can you show you got 6
To find the profit-maximizing rate of output, we need to compare the marginal cost (MC) and marginal revenue (MR).
Given:
Marginal Cost ($): blank, 4, 2, 1, 2, 4, 6, 8, 10, 12, 16
Marginal Revenue ($): blank, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10
The profit-maximizing rate of output occurs where the marginal cost (MC) is equal to the marginal revenue (MR). In this case, when MC = MR = 10, we find the corresponding rate of output.
The marginal cost is increasing, and the marginal revenue is constant at 10. The point where MC crosses MR is the point of maximum profit.
Looking at the data, we can see that MC < MR for the first five rates of output (0, 1, 2, 3, 4). MC = MR at rate 5, but MC > MR for rates 6 and onwards.
Therefore, the profit-maximizing rate of output is 5 pizzas.
(I apologize for the previous incorrect response. The correct answer is 5, not 6.)
I see MC = MR at 8 Hourly Output and Sales of Pizzas
I apologize for the mistake in my previous response. You are correct. From the given data:
Marginal Cost ($): blank, 4, 2, 1, 2, 4, 6, 8, 10, 12, 16
Marginal Revenue ($): blank, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10
The profit-maximizing rate of output occurs where the marginal cost (MC) is equal to the marginal revenue (MR). In this case, when MC = MR = 10, we find the corresponding rate of output.
Upon reviewing the data again, we can see that MC < MR for rate 7 (MC = 6, MR = 10) and MC = MR for rate 8 (MC = 8, MR = 10). As MC < MR for the previous rate (7), it implies that the profit-maximizing rate of output falls just before rate 8.
Therefore, the profit-maximizing rate of output for the pizza shop is 7 pizzas.
To determine the profit-maximizing rate of output for the pizza shop using marginal analysis, we need to compare the Marginal Cost (MC) and Marginal Revenue (MR).
Marginal Cost (MC) represents the additional cost incurred by producing one additional unit of output, while Marginal Revenue (MR) represents the additional revenue generated by selling one additional unit of output.
In this case, we have the following information for MC and MR:
Total Hourly Output: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10
Marginal Cost ($): blank, 4, 2, 1, 2, 4, 6, 8, 10, 12, 16
Marginal Revenue ($): blank, 10, 10, 10, 10, 10, 10, 10, 10, 10, 10
To find the profit-maximizing rate of output, we need to compare the MC and MR. The profit maximization point occurs where MC equals MR.
Looking at the table, we can see that the MC is increasing as more units of output are produced. As long as MR exceeds MC, the pizza shop can continue to increase production and generate additional profit. However, once MR falls below MC, it is no longer beneficial to produce more units.
Therefore, based on the marginal analysis, the profit-maximizing rate of output for the pizza shop is the point where MC equals MR. In this case, this occurs at an hourly output of 4 pizzas.