Reference no: EM131808138

Tom Railbon is an artist. He has a particular piece of sculpture that he makes and sells at local art fairs. He sells the sculpture for $220. Recently he decided it was time to actually do an economic analysis of his business to see how many pieces he should sell to maximize his profit. He came up with the following analysis of his costs:

Quantity              Total Variable Cost

1                                       $200

2                                       $380

3                                       $540

4                                       $720

5                                       $920

6                                   $1,170

7                                   $1,470

In addition to the variable costs, he also figures he has $100 in fixed costs. Using that information complete the following table:

Quantity    Total Variable Cost   Total Cost       Marginal Cost    Total Revenue      Marginal Revenue

       1                       $200

       2                       $380

       3                       $540

       4                       $720

       5                       $920

       6                     $1,170

       7                     $1,470

Now, using the Marginal Cost and Marginal Revenue, explain what quantity Tom should produce to maximize his profit.