Maria manages a bakery, that specializes in ciabatta bread, and has the followin
ID: 1112995 • Letter: M
Question
Maria manages a bakery, that specializes in ciabatta bread, and has the following information on demand and costs Ciabatta Bread Sold Price (P) Total Cost (TC) $2.00 6.00 9.00 11.50 13.50 15.00 16.00 17.50 20.00 Per Hour (Q) $6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 2 4 6 8 a. To maximize profits, Maria should sell loaves of ciabatta bread per hour. (Enter your response as an integer.) Maria should charge a price of $ (Enter your response rounded to two decimal places.) Maria's maximum profit is $. (Enter your response rounded to two decimal places.) b. The marginal revenue when selling the profit-maximizing number of loaves of ciabatta bread is $.(Enter your response rounded to two decimal places.) The marginal cost when selling the profit-maximizing number of loaves of ciabatta bread is $ (Enter your response rounded to two decimal places.)Explanation / Answer
Answer
TC=TVC+TFC
FC=TC-VC
AFC=FC/Q
AVC=VC/Q
ATC=TC/Q
MC of n the unit=(TC of n units -TC of p units )/(n-p)...............n>p
TR=P*Q
MR of n th unit=(TR of n units -TR of p units)/(n-p)...................n>p
profit=TR-TC
The firm produces at MR=MC or the closet lower MC
-----------
a)
Should sell 5 units
and charge $3.5
Profit=$2.5
b)
MR=$1.5
MC=$1.5