TABLE CALCULATIONS Flashcards
(19 cards)
How is TR found?
TR = PRICE X QUANTITY
How is MR found?
Subtract the first latest TR from the first TR and continue up the chart this way. In a perfectly competative market, its the same as price.
How is MC found?
Marginal cost is the previous TC subtracted from the current TC
How is profit found?
PROFIT = TR - TC
, how do i find where is the value of marginal revenue when profits are maximized and when total revenue is maximized?
remember that MR = MC for profit maximzation. Profits are maximized at the level of output where:
But in a table, if MR never exactly equals MC:
👉 What to do:
Find the row where MR is just above MC, and in the next row MR falls below MC.
The profit-maximizing output is usually right before MR drops below MC.
Then:
The value of MR at that output is the MR from that row.
The value of MC is the MC from the same row.
This is your approximate MR when profit is maximized.
and when is TR maximized?
TR is maximized when MR = 0
How do you find the ATC?
divide total cost by quantity
how do you find TC?
Fixed cost + variable cost
how do you find FC?
Fixed cost = Total cost - Variable cost
how do you find average variable cost?
AVC = TVC divided by quantity
how do you find TVC?
Subtract the previous output from the current output.
what is average cost pricing best used for?
limiting a regulated monopolist to normal profits
At what level of output would a monopolist produce to maximize profit?
producing the output for which marginal revenue equals marginal cost
Which of the following is a problem of marginal cost-pricing?
price is less than the firm’s average total cost
What is a barrier to entry?
a single producer is more efficient than a large number of producers
What is the monopoly’s profit?
Profit = (P – ATC) × Q
Which of the following best explains inefficient allocation of resources under monopoly?
P > MC
How does the marginal-revenue curve for a monopoly appear?
It lies below its demand curve
