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Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the table below.
a. Compute the marginal cost if the 4th mug per day.
b. If the market for mugs is perfectly competitive, and mugs sell for $7.50 each, then how many Chris should produce per day?
c. Compute fixed costs, total cost, and average variable costs for this production level.
d. Compute his economic profit/loss at p=$7.50.
e. At $7.50 per mug, should he expand his operation, continue operation, or shut down?
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