This preview shows page 1. Sign up to view the full content.
Unformatted text preview: 10. What is the profit-maximizing level of output and how much daily profit will the producer below (who is the same producer as in #9) earn if the price of pizza is $1.18/slice? Answer : This producer will sell 435 slices per day, the quantity for which P = MC. Total revenue will therefore be P x Q = ($1.18/slice) x (435 slices/day) = $513.30/day. Variable cost is AVC x Q = ($0.77/slice) (435 slices/day) = $334.95/day. Add fixed cost of $130/day to variable cost to obtain total cost = $464.95/day. So daily profit is TR - TC = $513.30/day -$464.95/day = $48.35/day....
View Full Document
This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.
- Spring '08