Question

1. A. The Table 1 below provides data for the Big Cat Rescue Company. The price of entrance is $60 and Q refers to the number of visitors who can visit the Big Cat Reserve. Calculate TR= Total Revenue, π=profit, MC= Marginal Cost and MR=Marginal revenue and fill in the blanks of the table.

B. Also, calculate TR, MR and π=profit when the entrance price falls to $50.

Table 1
Q	Price	TR when Price=60	TC	Profit π	MC	MR when Price=60	TR when P=$50	MR P=$50	Π P=$50
0	60		100
1	60		150
2	60		178
3	60		198
4	60		212
5	60		230
6	60		250
7	60		272
8	60		310
9	60		355
10	60		410

C. As you look over the completed table, what level of Q maximizes profit when price=$60 and when price=$50?

Answer 1

Total Revenue = Price x Quantity

Marginal Revenue = Change in Total revenue / Change in Quantity

Marginal Cost = Change in Total Cost / Change in Quantity

Profit = Total Revenue - Total Cost

Q	P	TR	MR	TC	MC	Profit
0	60	0	--	100	--	-100
1	60	60	60	150	50	-90
2	60	120	60	178	28	-58
3	60	180	60	198	20	-18
4	60	240	60	212	14	28
5	60	300	60	230	18	70
6	60	360	60	250	20	110
7	60	420	60	272	22	148
8	60	480	60	310	38	170
9	60	540	60	355	45	185
10	60	600	60	410	55	190

From the above table, the firm's achieves maximum profit at 10 units of 190

Q	P	TR	MR	TC	MC	Profit
0	50	0	--	100	--	-100
1	50	50	50	150	50	-100
2	50	100	50	178	28	-78
3	50	150	50	198	20	-48
4	50	200	50	212	14	-12
5	50	250	50	230	18	20
6	50	300	50	250	20	50
7	50	350	50	272	22	78
8	50	400	50	310	38	90
9	50	450	50	355	45	95
10	50	500	50	410	55	90

From the above table, the firm's achieves maximum profit at 9 units of 95