Your business has estimated its total cost to be TC = 3800 +0.25Q + 0.0018Q2; its marginal cost is thus MC = 0.25 + 0.0036Q,where Q is the amount of pieces provided and TC is in dollars.Because your market is moderately competitive, your business iscapable of selling its output for $12.85 each (which thereforeproduces MR = 12.85 and TR = 12.85Q).
a. Make a table in Excel showing TC and TR with Q on thehorizontal axis. Have Q go from 0 to 10,000 units (each row of yourQ column can grow by a relatively large number so that your tableisn’t large). Create a second table displaying MC and MR with Qagain on the horizontal axis.
b. What is the optimal level of output for your business toproduce/sell? What is the marginal revenue of the final unitsold?
c. What are the total revenue, total cost, and profit (netbenefit/net revenue/etc.) of selling the optimal amount ofunits?
d. An eager worker at your business hints that, because thebusiness makes $12.85 revenue for each unit sold, then the companycould make still more profit by selling more than the level chosenin part b; why would your business not want to make and sell moreoutput than the level you picked in part b?
