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Microeconomics - demand, output and profit

  1. Feb 29, 2008 #1
    charge per basket.................baskets sold per week
    $ 27...........................................................0
    24............................................................5
    21............................................................15
    18............................................................30
    15............................................................50
    12............................................................75
    9.............................................................105

    Q.....FC.....VC.....TC.....AVC.....AC.....MC.....TR.....MR.....Profit
    0......50......0
    5......50.....50
    15....50....125
    30....50....225
    50....50....350
    75....50....500
    105...50....750

    How much output will be produced?
    What is the profit at this level?
     
  2. jcsd
  3. Mar 1, 2008 #2

    Dale

    Staff: Mentor

    It is unlikely that anyone will do your homework for you unless you are paying them for it. That isn't the purpose of these forums. Please show some work and identify where you are struggling with the concepts so that people here can help clarify the points that are difficult for you.

    Also, please identify the abbreviations in the table, I only recognize a few.
     
  4. Mar 1, 2008 #3
    Q:quantity, FC:fixed cost, VC:variable cost, TC:total cost, AVC:average variable cost, AC:average cost, MC:marginal cost, TR:total revenue, MR:marginal revenue

    TC=FC+VC...AVC=VC/Q...AC=TC/Q...MC=delta(TC)/delta(Q)...TR=P x Q
    MR=delta(R)/delta(TR)
    ...........delta(Q)
    Profit=TR-TC

    Based on these equations these are the answers I got...

    Q.....FC.....VC.....TC.....AVC.....AC.....*MC.....TR.....*MR.....Profit
    0......50......0......50.....---......---......10......---......20......----
    5......50.....50.....100....10.......20......7.5.....600....11.67.....500
    15....50....125.....175....8.3...11.67.....---....4725......---.....4550

    *MC and MR numbers are on the "line" between 0,5 and 5,15
     
  5. Mar 2, 2008 #4

    Dale

    Staff: Mentor

    Everything looks good until the total revenue column. The formula is TR = P Q, but the numbers you have here look like you calculated P Q². I cannot evaluate your MR column since I don't have the formula for R which is in the formula for MR. Your Profit column is correctly calculated based on your incorrect TR column, but you will have to re-calculate Profit once you fix TR.
     
  6. Mar 3, 2008 #5
    I think my calculations are correct now (if I plug it into my calc correctly lol). After these calculations what equation(s) should I use to find a)How much output will be produced? b)What is the profit at this level? Or is the answer from the above calculations?
     
  7. Mar 4, 2008 #6

    Dale

    Staff: Mentor

    Profit is obviously the column labeled "Profit". I would guess that output = Q, but take that guess with a grain of salt. I am an engineer, not an economist!
     
  8. Mar 4, 2008 #7
    "I am an engineer, not an economist!"
    Scottie! We need more power...
     
  9. Mar 6, 2008 #8
    That's what we've all been saying to Gordon Brown and he is an economist.
     
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