Homework Answers
(1) Price = Total revenue (TR) / Quantity (Q) = $1000 / 10 = $100
(2) Total cost (TC) = Fixed cost (FC) + Variable cost (VC) and Profit = TR - TC
| Q | FC ($) | VC ($) | TC ($) | TR ($) | MC ($) | Profit ($) |
| 10 | 100 | 36 | 136 | 1000 | 864 | |
| 11 | 100 | 74 | 174 | 1100 | 38 | 926 |
| 12 | 100 | 145 | 245 | 1200 | 71 | 955 |
| 13 | 100 | 202 | 302 | 1300 | 57 | 998 |
| 14 | 100 | 300 | 400 | 1400 | 98 | 1000 |
| 15 | 100 | 435 | 535 | 1500 | 135 | 965 |
| 16 | 100 | 588 | 688 | 1600 | 153 | 912 |
| 17 | 100 | 774 | 874 | 1700 | 186 | 826 |
Profit is maximized when Q = 14 units
Maximum profit = $1000
Profit is lowest (= $826) when Q = 17 units
(3) Marginal revenue (MR) = $100 (Since in perfect competition, Price = MR)
(4) Marginal cost (MC) = Change in TC / Change in Q
MC of 11th unit = $38
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