Reference no: EM131169373
The following data represents a firm serving a transportation market. Total Output Total Revenue Total Cost 0 $0 $1,000 1 $1,700 $2,000 2 $3,300 $2,800 3 $4,800 $3,500 4 $6,200 $4,000 5 $7,500 $4,500 6 $8,700 $5,200 7 $9,800 $6,000 8 $10,800 $7,000 9 $11,700 $9,000 a. What price maximizes revenue? b. What price maximizes profit? c. What is fixed cost? d. The firm faces a rival that cuts its revenue significantly. The firm has decided to undertake predatory pricing to drive the other firm out of business. The other firm has a cost structure that looks like the following: Total Cost $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 Total Output 0 1 2 3 4 5 6 What price would drive the firm out of business? How much would it cost the incumbent firm to drive the rival out of market? Could the firm raise the price to recoup the losses?
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