Company Production Assignment | Homework For You
Your company has estimated its total cost to be TC = 5500 + 0.04Q + 0.0012Q2; its marginal cost is thus MC = 0.04 + 0.0024Q, where Q is the quantity of units produced and TC is in dollars. Since your market is relatively competitive, your company is able to sell its output for $8.44 each (which thus yields MR = 8.44 and TR = 8.44Q).
a. Produce a chart in Excel showing TC and TR with Q on the horizontal axis. Have Q go from 0 to 10,000 units. Produce a second chart showing MC and MR with Q again on the horizontal axis.
b. What is the optimal level of output for your company to produce/sell? What is the marginal revenue from the last unit sold?
c. What are the total revenue, total cost, and profit (net benefit/net revenue/etc.) from selling the optimal number of units?
d. An eager intern at your company suggests that, since the company earns $8.44 revenue for each unit sold, then the company could make still more profit by selling more than the level chosen in part b; why would your company not want to produce and sell more output than the level you chose in part b? Get Economics homework help today