Reference no: EM132480002

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 is capable of selling its output for $12.85 each (which therefore produces MR = 12.85 and TR = 12.85Q).

a. Make a table in Excel showing TC and TR with Q on the horizontal axis. Have Q go from 0 to 10,000 units (each row of your Q column can grow by a relatively large number so that your table isn't large). Make a second table displaying MC and MR with Q again on the horizontal axis.

b. What is the optimal level of output for your business to produce/sell? What is the marginal revenue of the final unit sold?

c. What are the total revenue, total cost, and profit (net benefit/net revenue/etc.) of selling the optimal amount of units?

d. An eager worker at your business hints that, because the business makes $12.85 revenue for each unit sold, then the company could make still more profit by selling more than the level chosen in part b; why would your business not want to make and sell more output than the level you picked in part b?