Question

Table 14-12 Bills Birdhouses COSTS REVENUES Quantity Total Produced Cost Marginal Quantity Cost Demanded Price Total Margina
Question 3 Refer to Table 14-12 (above in Q2). What is the average revenue when 4 units are sold? $0 $68 $400 $80 Question 4
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Answer #1
Quantity
Produced, Q
Total Cost (TC)in $ Marginal cost (MC) in $ =
change in total cost (TC )/ change in Quantity produced (Q)
Quantity
Demanded, Q
Price or Average Revenue in $ Total Revenue(TR)=Price x Quantity demanded Marginal Revenue (MR) in $ =
change in total revenue (TR )/ change in Quantity demanded (Q)
Total Profit in $ = TR-TC
0 0 xxx 0 80 0 xxx 0
1 50 50 1 80 80 80 30
2 102 52 2 80 160 80 58
3 157 55 3 80 240 80 83
4 217 60 4 80 320 80 103
5 285 68 5 80 400 80 115
6 365 80 6 80 480 80 115
7 462 97 7 80 560 80 98
8 582 120 8 80 640 80 58

Quesion1

4 units are sold at a price $80

So the total revenue = price x quantity demanded = 80x4 =$320

The total revenue from selling 4th unit is = $320

Answer Option(1) $320

Quesion3

Price of a product is known as average revenue which is given in the question

The price at 4th unit = Average revenue =$80

The average revenue when 4 units are sold = $80

Answer Option(4) $80

Quesion4

The condition of profit maximisation is

1. the profit maximisation level of output the MC=MR

2. the MC should intersects MR from below

Both these above conditions are fulfilled at 6th units therefore Bill maximise profit at 6th unit and the total profit obtained at this quantity is $115 clearly shown in the table

Answer Option(3) 6

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