Question

Based on the table below, what is the profit maximizing level of output for this firm in the short run?

Answer 1

Let's find the profit for each case:

1. Price= $ 10, Quantity= 16, Total Cost: $ 100

Revenue= Price x Quantity = 10 x 16 = $ 160

Profit = Revenue - Total Cost = 160 - 100 = $ 60

2. Price= $ 10, Quantity= 17, Total Cost: $ 105

Revenue= Price x Quantity = 10 x 17 = $ 170

Profit = Revenue - Total Cost = 170 - 105 = $ 65

3. Price= $ 10, Quantity= 18, Total Cost: $ 112

Revenue= Price x Quantity = 10 x 18 = $ 180

Profit = Revenue - Total Cost = 180 - 112 = $ 68

4. Price= $ 10, Quantity= 19, Total Cost: $ 121

Revenue= Price x Quantity = 10 x 19 = $ 190

Profit = Revenue - Total Cost = 190 - 121 = $ 69

5. Price= $ 10, Quantity= 20, Total Cost: $ 132

Revenue= Price x Quantity = 10 x 20 = $ 200

Profit = Revenue - Total Cost = 200 - 132 = $ 68

6. Price= $ 10, Quantity= 21, Total Cost: $ 145

Revenue= Price x Quantity = 10 x 21 = $ 210

Profit = Revenue - Total Cost = 210 - 145 = $ 65

The profit is maximized when the price is $ 10, quantity is 19 and the total cost is $ 121.

Definitions:

1. Price is the amount of money that allows the acquisition or use of a good or service.

2. Total cost is the economic cost that represents the manufacture of a product or the provision of a service.

3. Income is the total amount of money earned or collected.

4. Profit is the amount of money that is earned, after subtracting the total costs.

Answer 2

I hope I can be of help. Ok, lets start.

P is the price people pay for the product. Q is the quantity of the product that you sell and TC is the total cost of the production, marketing, logistics, etc to the company. Each row represents a period of time.

The formula to calculate profit is (P x Q) - TC

Row 1: (10.00 x 16 = 160) - 100 = 60

Row 2: (10.00 x 17 = 170) - 105 = 65

Row 3: (10.00 x 18 = 180) - 112 = 68

Row 4: (10.00 x 17 = 190) - 121 = 69  This is the profit maximizing level of output for the firm in the short run

Row 5: (10.00 x 17 = 200) - 132 = 68

Row 6: (10.00 x 17 = 210) - 145 = 65