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Unformatted text preview: the last wine decanter sold? MC= 40 +0.005Q 70=40+0.005(6000) MR(70)=40 + 0.005Q 70-30+40 30/0.005Q= 6000 70=70 Q=6000 Marginal Revenue is the same at $70 b. What are the total revenue, total cost, and net benefit (profit) from selling the optimal number of wine decanters? TR is $420,000 70(6000)=$420,000 TR=420,000 TC=340,000 TC= 10,000+40(6000)+0.0025(6000)^2 TC=$340,000 To obtain the NB you take TR-TC, (420,000-340,000)=80,000 NB c. At the optimal level of production of decanters, an extra decanter can be sold for $70, thereby increasing total revenue by $70. Why does the manager of this firm not produce and sell one more unit? c) MR=MC, at optimum level, producing more will not increase profits....
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- Spring '10