Reference no: EM133169818

Your company has estimated its total cost to be TC = 54,000 + 16Q + 0.006Q2; its marginal cost is thus MC = 16 + 0.012Q, where Q is the quantity of units produced and TC is in dollars. Since your market is relatively competitive, your company is able to sell its output for $94 each (which thus yields MR = 94 and TR = 94Q).

a. Produce a chart 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 increase by a relatively large number so that your table isn't huge). Produce a second chart showing MC and MR with Q again on the horizontal axis.

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

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

d. An eager intern at your company suggests that, since the company earns $94 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 company not want to produce and sell more output than the level you chose in part b?