Question

1.1. Fill in the blanks in the following table using Excel formulas:

Q	P	TR	TFC	TVC	AVC	TC	AC	π	MR	MC	Mπ
0			311,250		0.00
10,000	47.5	475000	311250	120000	12.00	431250	43.13		47.5	43.125
20,000	45	9000000	311250	230000	11.50	541250	27.06		42.5	11
30,000	42.5	1275000	311250	380100	12.67	691350	23.05		37.5	15
40,000	40	1600000	311250	570000	14.25	881250	22.03		32.5	19
50,000	37.5	1875000	311250	800000	16.00	1111250	22.23		27.5	23
60,000	35	2100000	311250	1069800	17.83	1381050	23.02		22.5	27
70,000	32.5	2275000	311250	1379700	19.71	1690950	24.16		17.5	31

P=50-0.00025Q.

1.2. Construct line charts for the Average Cost (AC), Average Variable Cost (AVC), Marginal Cost (MC), Marginal Revenue (MR) and Average Revenue (AR) on a Cartesian coordinate system.

Answer 1

Q	P	TR	TFC	TVC	AVC	TC	AC	π	MR	MC	Mπ
0			311250		0	311250		-311250
10,000	47.5	475000	311250	120000	12	431250	43.13	43750	47.5	43.125	4.375
20,000	45	9000000	311250	230000	11.5	541250	27.06	358750	42.5	11	31.5
30,000	42.5	1275000	311250	380100	12.67	691350	23.05	583650	37.5	15	22.5
40,000	40	1600000	311250	570000	14.25	881250	22.03	718750	32.5	19	13.5
50,000	37.5	1875000	311250	800000	16	1111250	22.23	763750	27.5	23	4.5
60,000	35	2100000	311250	1069800	17.83	1381050	23.02	718950	22.5	27	-4.5
70,000	32.5	2275000	311250	1379700	19.71	1690950	24.16	584050	17.5	31	-13.5

1. Profit, π = TR - TC i.e. it is difference between total revenue and total cost.
2. Marginal profit, Mπ = MR - MC.

The profit maximizing level of output is 50000.

Below are excel formulae-

Below are the relevant curves -