Question

Can you please walk me through this?

NAME DATE SECT QUIZ 4 ECO 222 You are a competitive manufacturer of children's tennis shoes. Below is your production data TR TC AVG TOTAL OUTPUT TOTAL REVENUE PRICE ATC MARGINAL MC REVENUE MARGNAL TOTAL PRICE) COST COST TOTAL COST TOTAL PROFIT 1) Complote the Total Revenue and Total Prolt columns 2) Complete the Marginal Coat and Average Total Coal columns 3) Al which quantity of output will you produce in the short-run and why? 4) What is the minimum break-even price you wil.com and why (ext) co222qz. WOCX

Answer 1

1) and 2) Pls see completed table (formulae are on top)

		PxQ		TR-TC		TC1 - TC0	TC / Q
Q	P	TR	TC	Total Profit	Marginal revenue	MC	ATC
0	10	0	1	-1	10	1
1	10	10	2	8	10	1	2.00
2	10	20	4	16	10	2	2.00
3	10	30	8	22	10	4	2.67
4	10	40	18	22	10	10	4.50
5	10	50	38	12	10	20	7.60
6	10	60	60	0	10	22	10.00
7	10	70	90	-20	10	30	12.86

3) production Q will be 4 units in the short run as here MC = MR and profit is maximized

4) the minimum break even price should allow recovery of fixed costs, i.e., $1, which is the cost for Q=0. Since MC for 1 unit is $1, a minimum price of $2 will allow us to recover the total cost of $2 by producing Q=1