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hw5ans - Econ 1 Winter 2008 Dr Narag 1 Homework 5(1 You are...

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Econ 1 Winter 2008 Dr. Narag 1 Homework 5 (1) You are hired as a consultant to a firm in a perfectly competitive market that sells tennis racquets at a market price of $35. The firm’s cost schedule is as follows: The profit maximizing level of output is 6, where MR=MC (2) Firm ABC is a price taker. It has the following hourly costs: Output Total Cost (Q per hour) (dollars per hour) 0 $10 1 21 2 30 3 41 4 54 5 69 6 86 a) If Q sells for $15, what is ABC’s profit-maximizing output per hour? What is his profit? Your answer must include graphical as well as numerical solutions. You must show the total and marginal graphical solutions. Q P TR TC Total Econ. Profit or Loss MR MC ATC 0 15 0 10 -10 15 --- 1 15 15 21 -6 15 11 21 2 15 30 30 0 15 9 15 3 15 45 41 4 15 11 13.6
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