Question

3. Given the data below, compute TR, TC, TFC, TVC, ATC, AVC, AFC, MR, MC, AR, and Profit 1 2 3 6 7 8 9 10 11 0 TC = 10 +570 - 80+ TR = 452 - 0 50. Find the profit maximizing level of output and graph all the curves. Note: for both problems. Graph all the total curves together on one graph Graph all the average and marginal curves together on one graph Graph the profit curve on one graph

Answer 1

Q	TR	TC	TFC	TVC	ATC	AVC	AFC	MR	MC	AR	Profit
0	0	10	10	0							-10
1	44.5	60	10	50	60.00	50.00	10.00	44.5	50	44.5	-15.5
2	88	100	10	90	50.00	45.00	5.00	43.5	40	44	-12
3	130.5	136	10	126	45.33	42.00	3.33	42.5	36	43.5	-5.5
4	172	174	10	164	43.50	41.00	2.50	41.5	38	43	-2
5	212.5	220	10	210	44.00	42.00	2.00	40.5	46	42.5	-7.5
6	252	280	10	270	46.67	45.00	1.67	39.5	60	42	-28
7	290.5	360	10	350	51.43	50.00	1.43	38.5	80	41.5	-69.5
8	328	466	10	456	58.25	57.00	1.25	37.5	106	41	-138
9	364.5	604	10	594	67.11	66.00	1.11	36.5	138	40.5	-239.5
10	400	780	10	770	78.00	77.00	1.00	35.5	176	40	-380
11	434.5	1000	10	990	90.91	90.00	0.91	34.5	220	39.5	-565.5

TFC = 10

TVC = TC - TFC

AFC = TFC/Q

AVC = TVC/Q

ATC = TC/Q

MR (nth unit) = TR (n units) - TR ((n-1) units)

MC (nth unit) = TC (n units) - TC ((n-1) units)

Profit = TR - TC

AR = TR/Q

Profit is maximized at Q = 4 (the last quantity where MR > = MC)

1200 1000 800 Costs III 400 200 TEN Quantity

250.00 200.00 150.00 Costs/Revenue 100.00 50.00 0.00 10 Quantity

Profit 10 -100 -200 Profit -300 Profit -400 -500 -600 Quantity