# Economics: Consider total cost and total revenue given

Economics: Consider total cost and total revenue given

# Economics: Consider total cost and total revenue given in the following table

Subject: Economics    / General Economics
Question

Question:

4.Consider total cost and total revenue given in the following table:

Quantity

0

1

2

3

4

5

6

7

Total cost

\$8

9

10

11

13

19

27

37

Total revenue

\$0

8

16

24

32

40

48

56

a.Calculate profit for each quantity. How much should the firm produce to maximize profit?
b.Calculate marginal revenue and marginal cost for each quantity. Graph them. (Hint:Put the points between whole numbers. For example, the marginal cost between 2 and 3 should be graphed at 2½) At what quantity do these curves cross? How does this relate to your answer to part (a)?
c.Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?

2.

A publisher faces the following demand schedule for the next novel from one of its popular authors: PriceQuantity Demanded\$1000 novels90100,00080200,00070300,00060400,00050500,00040600,00030700,00020800,00010900,00001,000,000 The author is paid \$2 million to write the book, and the marginal cost of publishing the book is a constant \$10 per book.
a.Compute total revenue, total cost, and profit at each quantity. What quantity would a profit-maximizing publisher choose? What price would it charge?
b.Compute marginal revenue. (Recall that MR = ?TR/?Q.) How does marginal revenue compare to the price? Explain.
c.Graph the marginal-revenue, marginal-cost, and demand curves. At what quantity do the marginal-revenue and marginal-cost curves cross? What does this signify?