ps2ans

# ps2ans - Economics 101 Introductory Microeconomics Fall...

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f4b442a26fc2ca99a142219417e555226953ab3d.xls Q1 2 Total Cost Profit 0 10.00 60 NA 10 10.00 100 20 10.00 160 30 10.00 220 40 10.00 300 50 10.00 420 60 10.00 580 70 10.00 730 NA Quantity Price (MR) Total Cost Profit 0 10.00 0 60.0 -60.0 NA 10 10.00 100 100.0 0.0 5.00 20 10.00 200 160.0 40.0 6.00 30 10.00 300 220.0 80.0 7.00 40 10.00 400 300.0 100.0 10.00 50 10.00 500 420.0 80.0 14.00 60 10.00 600 580.0 20.0 15.50 70 10.00 700 730.0 -30.0 NA Quantity (pounds of cookies) Price per pound Total Revenue Marginal Cost (per pound) Total Revenue Marginal Cost Answers a) Price = marginal revenue (by definition of a competitive market, but you can verify this by using the midpoint formula on the total revenue figures). The table below shows the total revenue and profit at each quantity. Total revenue = the number of pounds of cookies sold multiplied by the price of each pound. Profit = total revenue - total cost. From the table, we see that profits are maximized when Amanda produces 40 pounds On the first graph below, the profit is given by the vertical distance between the total revenue and total cost schedules. Notice that at a quantity of 0 and a quantity of 70 pounds, profit is negative (total cost exceeds total revenue). Total Costs and Revenues for Cookie Production
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## This note was uploaded on 02/19/2008 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell.

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ps2ans - Economics 101 Introductory Microeconomics Fall...

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