Question

Table 14-12 Bill's Birdhouses COSTS REVENUES Quantity Total Produced Cost Marginal Quantity Cost Demanded Price Total Marginal Revenue Revenue $0 $80 $50 $102 a wo $157 $217 $80 Ca W NA $285 $365 $80 $462 $80 $582 Refer to Table 14-12. What is the total revenue from selling 4 units? $320 5137 $480 $80

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