Question

The firm's demand is as follows:				Total variable costs are:
	Price	Quantity			Quantity	TVC
	$18	2			2	$15
	16	3			3	21
	15	4			4	27
	14	5			5	32
	13	6			6	37
	12	7			7	44
	10	8			8	52
				Fixed costs are $15
				at all quantities

1. What is the Marginal Revenue at a quantity of 5?

2, What is the Marginal Cost at a quantity of 7?

3. Using the MR-MC rule, what is the profit maximizing quantity this firm should produce?

4. How much profit do they make at this quantity?

Answer 1

P	Q	TVC	TFC	TC	TR	MR	PROFIT	MC
18	2	15	15	30	36		6
16	3	21	15	36	48	12	12	6
15	4	27	15	42	60	12	18	6
14	5	32	15	47	70	10	23	5
13	6	37	15	52	78	8	26	5
12	7	44	15	59	84	6	25	7
10	8	52	15	67	80	-4	13	8

TC=TFC+TVC

MC = change in TC

TR=P*Q

MR = change in TR

Profit = TR-TC

1) MR = 10

2) MC = 7

3) Q = 6

4) Profit = 26