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Q. Consider total cost and total revenue given in the table below:QUANTITY 0 1 2 3 4 5 6 7Total cost $8 $9 $10 $11 $13 $19 $27 $37Total revenue 0 8 16 24 32 40 48 56
a. Calculate profit for each quantity. Explain how much should the firm produce to maximize profit?
b. Calculate marginal revenue and marginal cost for each quantity. Graph them. (Hint: Put the points among whole no. For eg: marginal cost between 2 and 3 should be graphed at 2 1/2.)At what quantity do these curves cross? Explain how does this relate to your answer to part (a)?
c. Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?
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