Assume that the firm shown in the following table produces output using one fixed input and one variable input.
a. Complete this table and use it to find this firm’s short-run profit-maximizing quantity of output.
How much profit will this firm earn?
b. Redo the table and find the profit-maximizing quantity of output, if the price of the firm’s fixed input fell by half. How much profit will this firm earn now?
c. Now redo the original table and find the profit maximizing quantity of output, assuming the price of the variable input drops, and each MC value is 50% lower than before. How much profit will the firm earn in this case?
Output
Price
Total Revenue
Marginal Revenue
Total Cost
Marginal Cost
Profit
0
$3500
$0
$1000
$
4000
1
3000
2
2000
3
1000
4
5
6
9000
7
$36,000
8
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