Fill in the missing data for the price (P), total revenue (TR)…

Question:

A. Fill in the missing data for the price (P), total revenue (TR), marginal revenue (MR), total cost (TC), marginal cost (MC), profit (π), and marginal profit (M π) in the following table:

B. At what output level is profit maximized?

C. At what output level is revenue maximized?

D. Discuss any differences in your answers to parts B and C.

Answer:

a) The required table complete with formulas is below:

b) The profit is maximized when Q=5. The maximum profit is $ 375.

c) The revenue (TR) is maximized at Q=8. The maximum revenue is $640.

d) The revenue-maximizing output is generally greater than the profit-maximizing output as profit is the result of both total cost and total revenue. After some point, as the quantity increases, the increase in total revenue is less than the increase in total cost. Hence the profit-maximizing output is always less than the revenue-maximizing output because the cost is not considered in calculating revenues.

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