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Profit maximization

Profit Maximization

Profit Maximization

1) Fill in the missing data for price (P), total revenue (TR), Marginal Revenue (MR),
total cost (TC), Marginal Costs (MC), profit (ð), and marginal profit (Mð)
in the following table (all units except Q are dollars).

Q P TR=P*Q MR=∆TR/∆Q TC MC=∆TC/∆Q ð=TR-TC Mð=∆ð/∆Q
0 $200 $0 -- $0 -- $0 --
1 $180 $180 $180 $100 $100 $80 $80
2 $320 $175 $65
3 $420 $100 $240 $65 $180
4 $120 $60 $55 $185 $5
5 $100 $500 $350 $55 $150 -$35
6 $80 $480 -$20 $400 -$70
7 $60 -$60 $450 $50 -$30 -$110
8 $320 -$100 $55 -$185 -$155
9 $20 $180 $570 $65 -$205
10 $10 -$80 $750 $180 -$650 -$260

2) At what output (Q) level is profit maximized?

3) At what level output (Q) is revenue maximized?

4) Discuss any differences in your answers to parts A and B?

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Solution Summary

The expert examines profit maximization analysis. The level of outputs for profit maximization and revenue maximization are determined.

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