Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / How to calculate Marginal Benefit, Marginal Revenue, and Marginal cost, if the profit per unit, price per unit, quantity, costs per unit, and % return on sales are given? Explain with a quantitative example in dollar units, instead of percentages

How to calculate Marginal Benefit, Marginal Revenue, and Marginal cost, if the profit per unit, price per unit, quantity, costs per unit, and % return on sales are given? Explain with a quantitative example in dollar units, instead of percentages

Economics

How to calculate Marginal Benefit, Marginal Revenue, and Marginal cost, if the profit per unit, price per unit, quantity, costs per unit, and % return on sales are given? Explain with a quantitative example in dollar units, instead of percentages.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Assume we are given the following table:

Quantity Profit/Unit Cost/Unit Price/Unit
0 0 0 0
1 5 1 6
2 4 2 6
3 3 3 6
4 2 4 6
5 1 5 6
6 0 6 6
7 -1 7 6

To get marginal benefit, cost, and revenue first we need to find profit, total cost, and revenue at each output level. Profit is simply profit/unit multiplied by quantity. Total cost is cost/unit multiplied by quantity. Revenue is price/unit multiplied by quantity. We thus get the following table

 

Quantity Profit/Unit Cost/Unit Price/Unit Profit Total Cost Revenue
0 0 0 0 0 0 0
1 5 1 6 5 1 6
2 4 2 6 8 4 12
3 3 3 6 9 9 18
4 2 4 6 8 16 24
5 1 5 6 5 25 30
6 0 6 6 0 36 36
7 -1 7 6 -7 49 42

We then need to just take the changes in profit, total cost, and revenue from one output level to the next to get marginal benefit, marginal cost, and marginal revenue respectively. This gives us

 

Quantity Profit/Unit Cost/Unit Price/Unit Profit Total Cost Revenue Marginal Benefit Marginal Cost Marginal Revenue
0 0 0 0 0 0 0 - - -
1 5 1 6 5 1 6 5 1 6
2 4 2 6 8 4 12 3 3 6
3 3 3 6 9 9 18 1 5 6
4 2 4 6 8 16 24 -1 7 6
5 1 5 6 5 25 30 -3 9 6
6 0 6 6 0 36 36 -5 11 6
7 -1 7 6 -7 49 42 -7 13 6

Related Questions