Answered

Westonci.ca is your trusted source for accurate answers to all your questions. Join our community and start learning today! Connect with a community of experts ready to provide precise solutions to your questions quickly and accurately. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

The table below shows the total cost (TC) and marginal cost (MC) for Baker Street, a perfectly competitive firm producing different quantities of apple pies. The market price of apple pies is [tex]\$ 4.00[/tex] per pie.

a. Fill in the marginal revenue (MR) and average revenue (AR) columns.

Instructions: Round your answers to two decimal places.

Baker Street's Costs and Revenues

\begin{tabular}{|c|c|c|c|c|}
\hline
\begin{tabular}{l}
Quantity \\
(apple pies)
\end{tabular} & TC (dollars) & MC (dollars) & \begin{tabular}{c}
MR \\
(dollars)
\end{tabular} & \begin{tabular}{c}
AR \\
(dollars)
\end{tabular} \\
\hline 5 & [tex]$\$[/tex] 55.00[tex]$ & $[/tex]\[tex]$ 1.00$[/tex] & [tex]$\[tex]$[/tex]$ & \\
\hline 10 & [tex]$\$[/tex] 57.50[tex]$ & $[/tex]\[tex]$ 0.50$[/tex] & [tex]$\$[/tex]$[/tex] & \\
\hline 15 & [tex]$\$[/tex] 62.50[tex]$ & $[/tex]\[tex]$ 1.00$[/tex] & [tex]$\[tex]$[/tex]$ & \\
\hline 20 & [tex]$\$[/tex] 72.50[tex]$ & $[/tex]\[tex]$ 2.00$[/tex] & [tex]$\$[/tex]$[/tex] & \\
\hline 25 & [tex]$\$[/tex] 92.50[tex]$ & $[/tex]\[tex]$ 4.00$[/tex] & [tex]$\[tex]$[/tex]$ & \\
\hline 30 & [tex]$\$[/tex] 122.50[tex]$ & $[/tex]\[tex]$ 6.00$[/tex] & [tex]$\$[/tex]$[/tex] & \\
\hline
\end{tabular}

Instructions: Enter your answers as a whole number.

b. At the market price of [tex]\[tex]$ 4.00[/tex] per apple pie, how many apple pies should Baker Street make? $[/tex]\qquad$ apple pies

c. If the market price for apple pies were to rise to [tex]\[tex]$ 6.00[/tex] per apple pie, how many apple pies should Baker Street make? $[/tex]\qquad$ apple pies

Sagot :

GinnyAnswer
Sure, let's go through each part of the question.

### Part a: Fill in the Marginal Revenue (MR) and Average Revenue (AR) columns

To get started, let's recall that in a perfectly competitive market, the market price is both the Marginal Revenue (MR) and the Average Revenue (AR). Since the market price per apple pie is \[tex]$4.00, both MR and AR should be \$[/tex]4.00 for all quantities.

So, we simply fill in the MR and AR columns with the market price:

[tex]\[ \begin{array}{|c|c|c|c|c|} \hline \text{Quantity (apple pies)} & \text{TC (dollars)} & \text{MC (dollars)} & \text{MR (dollars)} & \text{AR (dollars)} \\ \hline 5 & 55.00 & 1.00 & 4.00 & 4.00 \\ \hline 10 & 57.50 & 0.50 & 4.00 & 4.00 \\ \hline 15 & 62.50 & 1.00 & 4.00 & 4.00 \\ \hline 20 & 72.50 & 2.00 & 4.00 & 4.00 \\ \hline 25 & 92.50 & 4.00 & 4.00 & 4.00 \\ \hline 30 & 122.50 & 6.00 & 4.00 & 4.00 \\ \hline \end{array} \][/tex]

### Part b: Determine the number of apple pies to produce at a market price of \$4.00 per apple pie

In order to maximize profit, the firm should produce at the quantity where Marginal Cost (MC) equals Marginal Revenue (MR). Given MR = \[tex]$4.00, we look for the quantity where MC = \$[/tex]4.00:

From the table, we observe:
\begin{itemize}
\item At quantity 25, \( MC = \$4.00 \)
\end{itemize}
Thus, the firm should produce 25 apple pies.

### Part c: Determine the number of apple pies to produce at a market price of \$6.00 per apple pie

Similarly, if the market price rises to \[tex]$6.00 per apple pie, we need to find the quantity where MC equals this new price, which is \$[/tex]6.00:

From the table, we observe:
\begin{itemize}
\item At quantity 30, \( MC = \$6.00 \)
\end{itemize}
Thus, the firm should produce 30 apple pies.

### Summary:
a. The complete table with MR and AR filled in:
[tex]\[ \begin{array}{|c|c|c|c|c|} \hline \text{Quantity (apple pies)} & \text{TC (dollars)} & \text{MC (dollars)} & \text{MR (dollars)} & \text{AR (dollars)} \\ \hline 5 & 55.00 & 1.00 & 4.00 & 4.00 \\ \hline 10 & 57.50 & 0.50 & 4.00 & 4.00 \\ \hline 15 & 62.50 & 1.00 & 4.00 & 4.00 \\ \hline 20 & 72.50 & 2.00 & 4.00 & 4.00 \\ \hline 25 & 92.50 & 4.00 & 4.00 & 4.00 \\ \hline 30 & 122.50 & 6.00 & 4.00 & 4.00 \\ \hline \end{array} \][/tex]

b. The firm should produce 25 apple pies at a market price of \$4.00 per apple pie.

c. If the market price rises to \$6.00 per apple pie, the firm should produce 30 apple pies.
We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. We hope this was helpful. Please come back whenever you need more information or answers to your queries. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.