Question

1. Suppose that the price of Oranges is $4. In addition, suppose that the firm's total costs are $32 and that the firm currently sells 110 Oranges.

Given this information, what is this firm's total revenue?

Use the following information to answer questions 2 through 5:

The table below shows data for the production of avocados for an individual firm operating in a perfectly competitive market.

Quantity of avocados	Total Revenue	Total Costs
0	0	10
10	60	30
20	120	40
30	180	60
40	240	90
50	300	130
60	360	180
70	420	240
80	480	310

2. Given this data, complete the table:

Quantity of avocados	Marginal Revenue (MR)	Marginal Costs (MC)	Profit
0	-	-
10
20
30
40
50
60
70
80

3. At what quantity does this firm maximize its profit?

NOTE: If there are two quantities with the same level of profits, pick the larger of the two quantities!

4. What is marginal revenue at the profit maximizing quantity?

NOTE: If there are two quantities with the same level of profits, pick the larger of the two quantities!

5. What is marginal cost at the profit maximizing quantity?

NOTE: If there are two quantities with the same level of profits, pick the larger of the two quantities!  

Answer 1

1) Total revenue = price*quantity

= 4*110

= 440

2) The firm will set MC=MR for profit maximization

MR = change in TR/change in Q

MC = change in TC/change in Q

profit = TR-TC

Q	TR	TC	MR	MC	Profit
0	0	10			-10
10	60	30	6	2	30
20	120	40	6	1	80
30	180	60	6	2	120
40	240	90	6	3	150
50	300	130	6	4	170
60	360	180	6	5	180
70	420	240	6	6	180
80	480	310	6	7	170

3) Profit is maximized at Q =70

4) MR = 6

5)MC = 6