Tom\'s Tattoos is a tattooingtattooing business in a perfectly competitive marke
ID: 1104034 • Letter: T
Question
Tom's Tattoos is a tattooingtattooing
business in a perfectly competitive market in
IthacaIthaca.
The market price of a
tattootattoo
is
$65.0065.00.
The table shows
Tom'sTom's
total costs.
How many
tattoostattoos
does
TomTom
sell in an hour and what is
Tom'sTom's
economic profit in the short run?
Checkpoint 2 Test A 1 Question Help Tom's Tattoos is a tattooing business in a perfectly competitive market in Ithaca. Total cost (dollars per hour) 20 70 100 140 190 250 320 Quantity (tattoos per hour) The market price of a tattoo is $65.00. The table shows Tom's total costs How many tattoos does Tom sell in an hour and what is Tom's economic profit in the short run? Tom's Tattoos sells tattoos an hour. 4 6Explanation / Answer
Perfectly competitive equilibrium
Price =MC
Since price is 65 and MC are 60 and 70 but Tom will produce where MC is 60 because at MC= 70 there will be some economic loss. AT MC=60 the profit is maximised and it is $75.
Tom will sell = 5 units of output
TR at 5 units= 65*5
=325
TC at 5 units =250
Profit = 325 -250
= $75
Economic profit = $75
Tom sells 5 units of tattoos per hour.
TR at 6 units= 65*6
=390
TC at 5 units =320
Profit = 390 -320
= $70
Q TC MC 0 20 - 1 70 50 2 100 30 3 140 40 4 190 50 5 250 60 6 320 70