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MC Price and Cost ATC $20 A MR AVC 12 60 100 140 Unlts of Output The above firm will produce units and charge a price of $ total revenues
MC Price and Cost ATC $20 A MR AVC 12 60 100 140 Unlts of Output The above firm will produce units and charge a price of $ total revenues .; total cost=$ . total profit=$. PROBLEM ? 2 5 points PRIC und COST ASC 18 14 12 5 IS OUTPUT The above firn will produce units and charge a price of $. total revenue=$ _; total cost=$. _ total profits
Expert Solution
Answer : 1) The profit maximizing condition is MR = MC. Here MR = MC occurs at output level of 100 units where the price level is $20 and ATC is $12. So, the firm will produce 100 units of output level and will charge the price level of $20. Total revenue = Price * Quantity = 20 * 100 = $2000.
Total cost = ATC * Quantity = 12 * 100 = $1200.
Total profit = Total revenue - Total cost = 2000 - 1200 = $800.
2) The profit maximizing condition is MR = MC. Here MR = MC occurs at output level of 5 units where the price level is $18 and ATC is $12. So, the firm will produce 5 units of output level and will charge the price level of $18. Total revenue = Price * Quantity = 18 * 5 = $90.
Total cost = ATC * Quantity = 12 * 5 = $60.
Total profit = Total revenue - Total cost = 90 - 60 = $30.
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