a) A manufacturing firm has the following price and cost structure: Number of Units Price Total cost (Output) (price) (price) 0 120 80 1 120 100 2 120 140 3 120 210 4 120 280 5 120 400 6 120 600 7 120 840 i) Calculate for each output Fixed costs, Marginal cost, Total revenue and Profit margin (Present your answer in a tabular format) ii) Under what market structure is the firm operating in? Explain. iii) How many units should firm sell in order to maximize profits and what is the maximum achievable profit?
a) A manufacturing firm has the following price and cost structure: Number of Units Price Total cost (Output) (price) (price) 0 120 80 1 120 100 2 120 140 3 120 210 4 120 280 5 120 400 6 120 600 7 120 840 i) Calculate for each output Fixed costs, Marginal cost, Total revenue and Profit margin (Present your answer in a tabular format) ii) Under what market structure is the firm operating in? Explain. iii) How many units should firm sell in order to maximize profits and what is the maximum achievable profit?
Chapter23: Profit Maximization
Section: Chapter Questions
Problem 5E
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Question
a) A manufacturing firm has the following
Number of Units Price Total cost
(Output) (price) (price)
0 120 80
1 120 100
2 120 140
3 120 210
4 120 280
5 120 400
6 120 600
7 120 840
i) Calculate for each output Fixed costs, Marginal cost, Total revenue and Profit margin
(Present your answer in a tabular format)
ii) Under what market structure is the firm operating in? Explain.
iii) How many units should firm sell in order to maximize profits and what is the maximum
achievable profit?
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