Asked by Steven Walsh on May 01, 2024
Verified
The following table contains information for a price taking competitive firm. Complete the table and determine the profit maximizing level of output (round your answer to the nearest whole number).
Total Marginal Fixed Average Total Average Marginal
Output Cost Cost Cost Cost Revenue Revenue Revenue
0 25
1 35
2 30
3 45
4 185
5 57
6 120 240
Competitive Firm
A company operating in a market where it competes with other entities for market share and profits by offering the best possible mix of price and quality.
Profit Maximizing
The process or strategy undertaken by businesses to achieve the highest possible profit, often entailing decisions on pricing, production, and cost management.
- Delineate the relationship among total revenue, total cost, marginal revenue, and marginal cost, highlighting their contribution towards profit elevation.
- Determine the output levels for maximum profit through the application of marginal analysis.
- Decode how profit maximization is portrayed through the use of graphs and tables detailing cost, revenue, and output levels' dynamics.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
Total Marginal Fixed Average Total Average Marginal
Output Cost Cost Cost Cost Revenue Revenue Revenue
0 25 - 25 - 0 - -
1 35 10 25 35 40 40 40
2 60 25 25 30 80 40 40
3 105 45 25 35 120 40 40
4 185 80 25 46 160 40 40
5 285 100 25 57 200 40 40
6 405 120 25 66 240 40 40
The profit maximizing level of output is 2.
Output Cost Cost Cost Cost Revenue Revenue Revenue
0 25 - 25 - 0 - -
1 35 10 25 35 40 40 40
2 60 25 25 30 80 40 40
3 105 45 25 35 120 40 40
4 185 80 25 46 160 40 40
5 285 100 25 57 200 40 40
6 405 120 25 66 240 40 40
The profit maximizing level of output is 2.
Learning Objectives
- Delineate the relationship among total revenue, total cost, marginal revenue, and marginal cost, highlighting their contribution towards profit elevation.
- Determine the output levels for maximum profit through the application of marginal analysis.
- Decode how profit maximization is portrayed through the use of graphs and tables detailing cost, revenue, and output levels' dynamics.