Question

The graph below shows the marginal, average variable, and average total cost curves for a pizza seller. Refer to the graph to answer the following questions. Instructions: Indicate the profit-maximizing level of output. Enter your response as a whole number. Cost Curves 3.50 3.25 3.00 2.75 Select Select Select 2.50 (S/slice) 2.00 W 1.75 1.50 1.25 1.00 0.75 0.50 0.25 100 200 300 400 500 600 700 800 900 Q -> Quantity (slices/day)

Answer 1

Red line is MC curve Gulln line is AC curve (Average total cost) Becown line is Ave curve a) fide Cost - AFCxO= (AC-Arc) x0=0.000 SJ0 = 275 b) 26 P=2.50 then profit max max outpe output = 550 slices of pizze c) variable Cost = Arcx = 1X550=550 d) T=Auct TFC=5304275=825 e TR = PxQ = 22.30x soro = 1375 6) profit = TR-TC=550 2) sia cost resis by $100 ② Bef then Profit dureass to $450! cat rusis by $100 o bolit maxqly renais same but total profilit deneases. nl Il P=2.25 then quy = 525 prices of pizza