2017 (Output/Costs/Revenues) Paper 3 HL

2017 (Output/Costs/Revenues) 

Paper 3 HL

(c) (i) Determine the Marginal Revenue when output is equal to 4 units.

 

(When TR is maximized MR = 0)

Revenue Maximization is where MR = 0

(ii) Determine, average revenue when output is equal to 6 units

AR = TR/Q

TR = 300 with 6 units produced

300/6 = $50

(iii) Determine, economic profit if output is equal to 2 units 

and average cost is equal to $130 per unit.

AC = $130 (per unit) = 130 x 2 = $260 (Total Costs)

Total Revenue for 2 units = $300

TR – TC = Profit

$300 = $260 = $40