Calculate the marginal costs and revenues

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Reference no: EM1378596

Question1. Suppose that you can sell widgets at $25 per widgets, for as many widgets as you can create. Suppose that the marginal cost of manufacturing each widget increases with the number of widgets that are manufactured. The formula is MC(Y) = Y2. For example, the marginal cost of producing the second widget is 4.

a) Using Excel or similar spreadsheet program, calculate the revenues for producing 1, 2, 3, ... , 10 widgets. Calculate the marginal costs of producing the 1, 2, 3, ..., 10 widgets. Calculate the total cost to produce 1, 2, 3, ... , 10 widgets. Determine your profits for producing 1, 2, 3, ..., 10 widgets. What level of production maximizes your profits?

b) Remember from micro economics that in a perfectly competitive market, a producer will produce the number of products such that MC = Price. Is this the case here? Verify it.

Reference no: EM1378596

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