Brody’s firm produces trumpets in a perfectly competitive market. The table below shows Brody’s total variable cost. He has a fixed cost of $240, and the price per trumpet is $60.
a. Calculate the average total cost of producing 6 trumpets. Show your work.
b.Calculate the marginal cost of producing the 11th trumpet.
c. What is Brody’s profit-maximizing quantity? Use marginal analysis to explain your answer.
d. At the profit-maximizing quantity you determined in part (c), calculate Brody’s profit or loss. Show your work.
e. Brody also produces saxophones at a loss in a perfectly competitive market. Draw a correctly labeled graph for Brody’s firm showing the following at a market price of $200.
- Brody’s profit-maximizing quantity of saxophones
- Brody’s loss, completely shaded
