a)
Q | TR | TC | MR = ∆TR/∆Q | MC= ∆TC/∆Q | Profit = TR - TC | Marginal Profit = ∆Profit/∆Q |
0 | 150 | 100 | - | - | 50 | - |
1 | 195 | 106 | 45 | 6 | 89 | 39 |
2 | 230 | 112 | 35 | 6 | 118 | 29 |
3 | 255 | 118 | 25 | 6 | 137 | 19 |
4 | 270 | 124 | 15 | 6 | 146 | 9 |
5 | 275 | 130 | 5 | 6 | 145 | -1 |
6 | 270 | 136 | -5 | 6 | 134 | -11 |
7 | 255 | 142 | -15 | 6 | 113 | -21 |
8 | 230 | 148 | -25 | 6 | 82 | -31 |
9 | 195 | 154 | -35 | 6 | 41 | -41 |
10 | 150 | 160 | -45 | 6 | -10 | -51 |
b) Profit is maximized at the output level of 4.
c) At the profit maximizing level of output, MR > MC.
d) At the profit maximizing level of output, Marginal Profit is $9.
e) Profit = TR - TC = (150 + 50Q - 5Q2) - (100 + 6Q) = = 150 + 50Q - 5Q2 - 100 - 6Q = 50 + 44Q - 5Q2
Marginal Profit = 44 - 10Q
Profit is maximized When Marginal Profit i > or = 0
44 - 10Q > or = 0
44 > or = 10Q
44 / 10 > or = Q
4.4 > = Q
Thus, if we round it, we can find Q = 4.
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