question archive The table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a monopolistic firm producing different quantities of chocolate gift boxes
The table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a monopolistic firm producing different quantities of chocolate gift boxes
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The table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a monopolistic firm producing different quantities of chocolate gift boxes. Fill in the blanks in the table.
|
Quantity |
Price |
Total REVENUE |
TOTAL COST |
MARGINAL COST |
MARGINAL REVENUE |
|
0 |
$19 |
$0 |
$30 |
- |
- |
|
25 |
18 |
450 |
205 |
$7 |
|
|
30 |
510 |
237.5 |
6.5 |
12 |
|
|
35 |
16 |
272.5 |
10 |
||
|
40 |
15 |
600 |
312.5 |
8 |
8 |
|
45 |
14 |
630 |
10 |
||
|
50 |
13 |
650 |
422.5 |
12 |
4 |
INSTRUCTIONS; ENTER YOUR ANSWERS AS WHOLE NUMBERS. FOR PROFIT, ROUND YOUR ANSWER TO 2 DECIMAL PLACES.
Profit -Maximizing quantity=
Profit-maximizing price=
Profit =
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Answer:
Working notes:
(1) Total revenue (TR) = Price x Quantity (Q), therefore
P = TR / Q
(2) Marginal cost (MC) = Change in Total cost (TC) / Change in Q, therefore
Change in TC = MC x Change in Q
(3) Marginal revenue (MR) = Change in TR / Change in Q
(4) Profit = TR - TC
Therefore
| Q | P | TR | TC | MC | MR | Profit |
| 0 | 19 | 0 | 30 | - | - | -30.00 |
| 25 | 18 | 450 | 205 | 7 | 18 | 245.00 |
| 30 | 17 | 510 | 238 | 7 | 12 | 272.50 |
| 35 | 16 | 560 | 273 | 7 | 10 | 287.50 |
| 40 | 15 | 600 | 313 | 8 | 8 | 287.50 |
| 45 | 14 | 630 | 363 | 10 | 6 | 267.00 |
| 50 | 13 | 650 | 423 | 12 | 4 | 227.50 |
Profit is maximized when MR = MC, which holds true when MR = MC = $8.
Profit-maximizing quantity = 40
Profit-maximizing price = $15
Maximum profit = $287.50
