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Exhibit 10-8 Total Quantity Revenue 2 $117
3
Total Cost
$99

5165 $129 $14 • #1141.1. 10,411,41.11.* .404.1•00.01.000,41,

ramormismaimavillIMINIWIN46410.411.410410.10,10k 1111.111K4.411111410.11.10

average total cost at the profit maximizing level of output equals a. 23 b. 25.80 c. 29 d. 36

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Computation of Average Total Cost at Profit-Maximizing Level Output:
Quantity	Total Revenue	Total Cost	Marginal Revenue	Marginal Cost	Average Total Cost
(Q)	(TR)	(TC)	(MR)	(MC)	(ATC)
2	$117	$99	-	-	$49.50
3	$135	$107	$18	$8	$35.67
4	$152	$116	$17	$9	$29.00
5	$165	$129	$13	$13	$25.80
6	$176	$144	$11	$15	$24.00

Here,

Marginal Revenue = Change in Total Revenue / Change in Total Output

Marginal Cost = Change in Total Cost / Change in Total Output

Average Total Cost = Total Cost/Quantity

The Profit-maximizing output is where Marginal Revenue equals to Marginal Cost.

Marginal Revenue = Marginal Cost

In this case, When the quantity is 5, Marginal Revenue and Marginal Cost are equal ($13)

So,

Average Total Cost at Profit-Maximizing Level Output is $25.80

The correct option is B $25.80

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