Marginal Cost & Marginal Revenue
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The data below are for a competitive business (price-taker).
Output Average Average Average
Fixed Cost Variable Cost Total Costs Marginal Cost
0 $3,000
1 $3,000 $900 $3,900 $900
2 $1,500 $800 $2,300 $700
3 $1,000 $700 $1,700 $500
4 $750 $600 $1,350 $300
5 $600 $500 $1,100 $100
6 $500 $550 $1,050 $800
7 $429 $600 $1,029 $900
8 $375 $650 $1,025 $1,000
9 $333 $700 $1,033 $1,100
10 $300 $750 $1,050 $1,200
If the market price is $1,100 per unit, the company should:
a. six units with profit of $300.
b. six units with profit of $3,300.
c. nine units with profit of $600.
d. nine units with profit of $3,600.
Thinking it either C or D since that is where MC=MR. But don't know how to calculate the profit!
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