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Slash and Burn is a monopolist that can sell its output at these prices and with these total costs:
Output Price Total Cost
4 $27 $28
5 26 34
6 25 42
7 24 52
8 23 64
9 22 88
10 21 105
11 20 125
12 19 148
13 18 174
14 17 204
a) What level of output will Slash and Burn choose to produce? What will the selling price and profit be?
b) Suppose that Slash and Burn produced at the level that a perfectly competitive industry would, with marginal cost equal to price. What would be the output, price and profit?
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DIFERENCE BETWEEN MARGINAL AND DIFFERENTIAL COSTING
The following details were extracted from the standard cost card of a component: Raw Materials 2.82 Kgs @ Rs.4.80 Kg. Direct Labour Type I 6
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