Table 14-12 Bill’s Birdhouses COSTS REVENUES Quantity Total Produced Cost Marginal Quantity Cost Demanded Price Total…
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Question “Table 14-12 Bill’s Birdhouses COSTS REVENUES Quantity Total Produced Cost Marginal Quantity Cost Demanded Price Total…”
Answer
Quantity of Products, Q | Total cost (TC) in $ |
Marginal cost (MC), in $ Change in Total Cost (TC)/ Change in Quantity Produced (Q) |
Quantity Q | Average Revenue in $ or Price | Total Revenue (TR) = Price x Quantity |
Marginal Revenue (MR), in $ Change in Total Revenue (TR)/ Change in Quantity Needed (Q). | Total Profit in USD = TR-TC |
0 | 0 | xxx | 0 | 80 | 0 | xxx | 0 |
1 | 50 | 50 | 1 | 80 | 80 | 80 | 30 |
2 | 102 | 52 | 2 | 80 | 160 | 80 | 58 |
3 | 157 | 55 | 3 | 80 | 240 | 80 | 83 |
4 | 217 | 60 | 4 | 80 | 320 | 80 | 103 |
5 | 285 | 68 | 5 | 80 | 400 | 80 | 115 |
6 | 365 | 80 | 6 | 80 | 480 | 80 | 115 |
7 | 462 | 97 | 7 | 80 | 560 | 80 | 98 |
8 | 582 | 120 | 8 | 80 | 640 | 80 | 58 |
Quesion1
4 units sold at $80
The total revenue is the price x quantity required = 80×4 =$320
The revenue from the sale of the 4th unit is $320
Answer Option(1) $320
Quesion3
The average revenue is the price of a product. This information is provided in the question
The average revenue = $80 for the 4th unit.
Average revenue of 4 units sold = $80
Answer Option(4) $80
Quesion4
Profit maximisation is a condition.
1. The profit maximisation level of output, MC=MR
2. The MC should intersect MR from below
These conditions are met at 6th units, therefore Bill maximizes profit at 6th unit. The total profit at this quantity is $115, as clearly shown in the table
Answer option (3) 6
Conclusion
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