Answer
MR=P=$8 as the total revenue increasing by a constant amount so the MR=P
P=TR/Q=8/1=16/2=8 and so on
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MC(n)=TC(n)-TC(n-1)
MC(n)=marginal cost of n th unit
TC(n)=Total cost of n units of output
MC(1)=9-5=4 and so on
Q | TR | TC | MR | MC | Profit |
0 | 0 | 5 | -5 | ||
1 | 8 | 9 | 8 | 4 | -1 |
2 | 16 | 14 | 8 | 5 | 2 |
3 | 24 | 20 | 8 | 6 | 4 |
4 | 32 | 27 | 8 | 7 | 5 |
5 | 40 | 35 | 8 | 8 | 5 |
6 | 48 | 44 | 8 | 9 | 4 |
7 | 56 | 54 | 8 | 10 | 2 |
8 | 64 | 65 | 8 | 11 | -1 |
9 | 72 | 72 | 8 | 7 | 0 |
the firm produces at MR=MC
where
Q=5 units
Option D
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