Blog: Eco401 Assignment No. 2 solution

TR ..............MR.............TC ...............MC.........PROFIT
1000........... - . ........ 900 .............. - .......... 100
1125 ........125 ...........980 ............ 80............ 145
1200......... 75............... 1055........... 75......... 145
1225.............. 25 ............ 1145............ 90........... 80


B)Profit is maximize at 3 point where MR=MC




:::::::::::::::::

P TFC TVC TR(p*Q) MR(dTR/dq)
TC(TFC+TVC
MC(dTC/dQ) Profit()
400 2.5 150 750 1000 -900 - 100
500 2.25 150 830 1125 125980 80 145
600 2 150 905 1200 751055 75 145
700 1.75 150 995 1225 251145 90 80






TR = P x Q
MR = change in TR/change in Q
MC = change in TC/change in Q
TC = TVC + TFC
Profit = TR - TC


Applying these formula’s....
TRMRTC MC Profit
1000—900 -- 100
11251.25980 0.8 145
12000.751055 0.75 145
12250.251145 0.9 80




B)
3rd point on outputs...i.e 600
::::::::::::::::::::::::::::::::::::::::::::


Q.... ....P.... TFC.... ....TVC.... TR....  MR....  TC.... .... .... .... ....MC.... ....  Profit
400....2.5.... .... 150.... 750.... 1000.... -.... ....  900  -.... .... 100
500....2.25.... ....150.... 830.... 1125.... 125....  98.... .... .... .... 80.... .... 145
600....2  150.... 905.... 1200.... 75....  1055.... .... ....  75.... .... 145
700....1.75.... ....150.... 995.... 1225.... 25....  1145.... .... ....  90.... ....  80
:::::::::::::::::::::::::::

Solution:

A)

Calculate total revenue (TR), marginal revenue (MR), total cost (TC),

marginal cost (MC) and profit (π) for each level of output (Q).

Q	P	TFC	TVC	TR(p*Q)	MR(dTR/dq)	TC(TFC+TVC)	MC(dTC/dQ)	Profit(π)
400	2.5	150	750	1000	-	900	-	100
500	2.25	150	830	1125	1.25	980	0.8	145
600	2	150	905	1200	0.75	1055	0.75	145
700	1.75	150	995	1225	0.25	1145	0.9	80

B. Find the optimal level of output and price which maximizes firm’sprofit.

Answer:

As we know that profit is maximized at the point where MC = MR. The

optimal level of Output (Q) and Price (P) at which maximizes firm’s profit is 600

and 2.
................................
ye formulas put ker k solve hoga question
TR= P x Q
MR = ΔTR/ΔQ
TC = TFC + TVC
MC = ΔTC/ΔQ
Profit = TR – TC