Question

Question 2: You run a firm that produces T-shirts that are sold in a perich s competitive market. Your firm faces the following cost and revenue schedale a) Fill in the table above. b) What is your firm's profit maximizing level of output? Average Aen Total Total Marginal Marginal Fixed Variable Totl Quantit Cost Cost 15 15 15 15 15 15 15 12 45 60 78

Answer 1

Since nothing is mentioned we are assuming Fixed costs will remain same.

Quantity	Price	Total Revenue	Total Cost	Profit	Marginal Revenue	Marginal Cost	Fixed Cost	Variable Cost	Average Total Cost	Average Variable Cost
0	15	0	5	-5	-	-	5	0	-	-
1	15	15	12	3	8	7	5	7	12	7.00
2	15	30	22	8	5	10	5	17	11	8.50
3	15	45	33	12	4	11	5	28	11	9.33
4	15	60	45	15	3	12	5	40	11.25	10.00
5	15	75	60	15	0	15	5	55	12	11.00
6	15	90	78	12	-3	18	5	73	13	12.17

As can be seen from the table above profit maximizing level of output is  Quatity4 & Quantity 5 since profit is maximum at this level of output, but since after producing 4 units profit is not increasing when we produce the 5 units therefore effectively firms profit maximizing level of output is 4 units