Calculate the marginal cost, marginal revenue, average cost, average revenue, average variable cost, profit.
A manufacturer of electronics products has just developed a handheld computer. The subsiquent is the price schedule for producing these computers on a monthly basis. Also included is a schedule of prices and quantities that the firm believes it will be able to sell, based on previous market research.
|
Q (thousand)
|
Price
|
MR
|
AVC
|
AC
|
MC
|
|
0
|
$1,650
|
|
|
|
|
|
1
|
1,570
|
$1,570
|
$1,281
|
$2,281
|
$1,281
|
|
2
|
1,490
|
1,410
|
1,134
|
1,634
|
987
|
|
3
|
1,410
|
1,250
|
1,009
|
1,342
|
759
|
|
4
|
1,330
|
1,090
|
906
|
1,156
|
597
|
|
5
|
1,250
|
930
|
825
|
1,025
|
501
|
|
6
|
1,170
|
770
|
766
|
933
|
471
|
|
7
|
1,090
|
610
|
729
|
872
|
507
|
|
8
|
1,010
|
450
|
714
|
839
|
609
|
|
9
|
930
|
290
|
721
|
832
|
777
|
|
10
|
850
|
130
|
750
|
850
|
1,011
|
- What price should the firm charge if it wants to maximize its profits in the short run?
- What arguments can be made for charging a price higher than this price? If a higher price is established, what amount would you recommend? Explain.
What arguments can be made for charging a lower price than the profit maximizing level? If a lower price is established, what amount would you recommend? Explain.