Question

Subject Microeconomics Quantity AFC AVC ATC TC MC MR Profit/loss 1 60 45 --- 56 2...

Subject Microeconomics

Quantity

AFC

AVC

ATC

TC

MC

MR

Profit/loss

1

60

45

---

56

2

30

42.5

3

20

40

4

37.5

5

37

6

37.5

7

38.57

8

40.63

9

43.33

10

46.5

Week 2: Problem: Profitability

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Answer #1

Since no information on marginal revenue is given we will consider it to be constant.

Hence profits will be calculated as:

Profit = (Marginal revenue*Quantity) - Total Cost

Quantity AFC AVC ATC TC MC MR Profit/Loss
1 60 45 105 105 - 56 -49
2 30 42.5 72.5 145 40 56 -33
3 20 40 60 180 35 56 -12
4 15 37.5 52.5 210 30 56 14
5 12 37 49 245 35 56 35
6 10 37.5 47.5 285 40 56 51
7 8.57 38.57 47.14 330 45 56 62
8 7.5 40.63 48.13 385 55 56 63
9 6.67 43.33 50 450 65 56 54
10 6 46.5 52.5 525 75 56 35

Hence we can see that Profits are maximised at q = 8 where profits = 63.

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