What steps do I take to complete the profit-maximization table at the link below? http://postimage.org/image/7fniecd7h/
The steps that you must take to fill in the chart are as follows:
- To find the price, divide the total revenue by the number of kilograms that the firm produced. Therefore, for the first 100 kg, you take the $48 in total revenue, divide it by 100 kg, and get $.48 per kg for your price.
- To find the marginal revenue, take the total revenue for one output (200 kg, for example). From that figure, you subtract the total revenue from the previous level of output (100 kg). Since the chart calls for price per kg, and not price per 100 kg, you must then divide that by 100.
- The procedure for finding the marginal cost per kg is the same, only you have to use total costs rather than total revenues. You can see an example of this for the 100 kg level of output. (Total costs of $41 at 100 kg – total costs of $18 at 0 kg = $23 in new costs. Divide $23 by 100. The resulting $.23 per kg is the marginal cost per kg.)
- To find the average cost per kg divide the total cost at each level of production by the number of kilograms of product.
- To find the profit or loss, subtract total costs from total revenues. When the firm produces 200 kg, this is $96-57 = $39 profit.
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