You are given the following data concerning total production

You are given the following data concerning total production costs of a manufacturing firm at various levels of output. If this firm can sell as much as it wants at a price of EUR 12, Calculate the firm\'s total revenue schedule. Calculate its marginal cost schedule. Identify the profit-maximizing volume of output. Find the maximal profit.

Solution

Working notes:

(1) Total revenue, TR = P x Q = 12 x Q

(2) Marginal cost, MC = Change in TC / Change in Q

(3) Profit = TR - TC

So,

(a) & (b):

Calculated table as follows.

(c) & (d):

Maximum profit = EUR 500

At this level of profit, Q = 400 units

Q	TC (EUR)	MC (EUR)	TR (EUR) = 12 x Q	Profit (EUR)
0	1000		0	-1000
20	1200	10	240	-960
40	1300	5	480	-820
60	1380	4	720	-660
100	1600	5.5	1200	-400
200	2300	7	2400	100
300	3200	9	3600	400
400	4300	11	4800	500
500	5650	13.5	6000	350
1000	13650	16	12000	-1650