Question

QUESTION 40

1. Amount of Variable Input	Amount of Output	Unit Price	Cost per input	Total cost	Marginal cost
   0	0	0	0	0	0
   1	5	$45	$670
   2	25	$45	$670
   3	55	$45	$670
   4	75	$45	$670	A
   5	100	$45	$670	B
   6	118	$45	$670	C	F
   7	135	$45	$670	D	G
   8	152	$45	$670	E	H
   9	167	$45	$670		I
   10	170	$45	$670		J
   11	169	$45	$670

   What is A+B+C+D+E?

2. What is F+G+H+I+J? (Use table in question 40) ignore decimal places

3. Using results of question 37-40, find profit maximizing output level.

   From output level between  and

Answer 1

Total cost = Amount of variable input*Cost per input
A = 4*670 = 2,680
B = 5*670 = 3,350
C = 6*670 = 4,020
D = 7*670 = 4,690
E = 8*670 = 5,360

So,  A+B+C+D+E = $20,100

Marginal cost = Change in total cost/Change in output
F = (C-B)/(118-100) = (4,020-3350)/18 = 670/18 = 37.22
G = (D-C)/(135-118) = (4,690-4,020)/17 = 670/17 = 39.41
H = (E-D)/(152-135) = (5,360-4,690)/17 = 670/17 = 39.41
I = 670/(167-152) = 670/15 = 44.67
J = 670/(170-167) = 670/3 = 223.33
(Change in total cost = 670)

F+G+H+I+J = $384.04

Profit maximizing output level is that for which MR just exceeds or equals MC.
MR = 45 exceeds MC = 44.67 till Q = 9. After Q = 9, MR < MC.
So, the profit maximizing output level is 9 units.