IU Shirts is a profit maximizing firm in a perfectly competitive market that produces shirts. IU...
Question:
IU Shirts
| Shirts (per hour) | Total Revenue | Total Variable Cost |
|---|---|---|
| $0 | $0 | $0 |
| 1 | 9 | 4 |
| 2 | 18 | 9 |
| 3 | 27 | 15 |
| 4 | 36 | 22 |
| 5 | 45 | 30 |
| 6 | 54 | 40 |
| 7 | 63 | 52 |
IU Shirts is a profit maximizing firm in a perfectly competitive market that produces shirts. IU Shirts uses fixed inputs that cost $10 per hour. From the information in the table we could predict that IU Shirts would produce _____ shirts and earn an economy profit of _____ per hour. Assume that IU Shirts only produces whole shirts (no portion of a shirt production is allowed)
A. 5; $5
B. 6; $14
C. 4; $14
D. 5; $15
E. 6; S4
Profit Maximization:
A firm maximizes profit where the difference between the total revenue and the total cost is the largest. This can be done by increasing production until the last point where marginal revenue is no longer greater than or equal to marginal cost.
Answer and Explanation: 1
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View this answerAnswer: D
To solve this problem we need marginal revenue and marginal cost. Marginal revenue is the change in the total revenue from one row to the...
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