Show full answers to part b) c) & d) **Exercise 3**Nancy sells beeswax in a perfectly competitive market for $50 per pound. Nancy’s total fixed costs are $15, and Nancy is capable of producing up to 6 pounds of beeswax each year.a) Fill in the table below. *[Hint: Use the information about fixed cost and marginal cost to calculate total cost and then calculate the other measures]*| q | Total Revenue | Total Fixed Cost | Total Variable Cost | Total Cost | Profit | Marginal Revenue | Marginal Cost ||---|---------------|------------------|---------------------|------------|--------|------------------|---------------|| 0 | | | | | | --- | --- || 1 | | | | | | | 30 || 2 | | | | | | | 35 || 3 | | | | | | | 42 || 4 | | | | | | | 50 || 5 | | | | | | | 60 || 6 | | | | | | | 72 |b) If Nancy is interested in maximizing her total revenue, how many pounds of beeswax should she produce?c) What quantity of beeswax should Nancy produce in order to maximize her profit?d) At the profit-maximizing level of output, how do marginal revenue and marginal cost compare?

A perfectly competitive market is a market structure in which there are many buyers and sellers of…

Exercise 3 Nancy sells beeswax in a perfectly competitive market for $50 per pound. Nancy's total fixed costs are $15, and Nancy is capable of producing up to 6 pounds of beeswax each year. a) Fill in the table below. [Hint: Use the information about fixed cost and marginal cost to calculate total cost and then calculate the other measures] q 0 1 23456 4 6 Total Revenue Total Total Total Fixed Cost Variable Cost Cost Profit Marginal Marginal Revenue Cost 30 35 42 50 60 72 b) If Nancy is interested in maximizing her total revenue, how many pounds of beeswax should she produce? c) What quantity of beeswax should Nancy produce in order to maximize her profit? d) At the profit-maximizing level of output, how do marginal revenue and marginal cost compare?

Exercise 3 Nancy sells beeswax in a perfectly competitive market for $50 per pound. Nancy's total fixed costs are $15, and Nancy is capable of producing up to 6 pounds of beeswax each year. a) Fill in the table below. [Hint: Use the information about fixed cost and marginal cost to calculate total cost and then calculate the other measures] q 0 1 23456 4 6 Total Revenue Total Total Total Fixed Cost Variable Cost Cost Profit Marginal Marginal Revenue Cost 30 35 42 50 60 72 b) If Nancy is interested in maximizing her total revenue, how many pounds of beeswax should she produce? c) What quantity of beeswax should Nancy produce in order to maximize her profit? d) At the profit-maximizing level of output, how do marginal revenue and marginal cost compare?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Show full answers to part b) c) & d)

**Exercise 3**

Nancy sells beeswax in a perfectly competitive market for $50 per pound. Nancy’s total fixed costs are $15, and Nancy is capable of producing up to 6 pounds of beeswax each year.

a) Fill in the table below. *[Hint: Use the information about fixed cost and marginal cost to calculate total cost and then calculate the other measures]*

| q | Total Revenue | Total Fixed Cost | Total Variable Cost | Total Cost | Profit | Marginal Revenue | Marginal Cost |
|---|---------------|------------------|---------------------|------------|--------|------------------|---------------|
| 0 | | | | | | --- | --- |
| 1 | | | | | | | 30 |
| 2 | | | | | | | 35 |
| 3 | | | | | | | 42 |
| 4 | | | | | | | 50 |
| 5 | | | | | | | 60 |
| 6 | | | | | | | 72 |

b) If Nancy is interested in maximizing her total revenue, how many pounds of beeswax should she produce?

c) What quantity of beeswax should Nancy produce in order to maximize her profit?

d) At the profit-maximizing level of output, how do marginal revenue and marginal cost compare?

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Step 1: Introduce the concept of perfectly competitive market.

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Step 2: a) Fill the given table.

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Step 3: b) Determine how many pounds of beeswax should she produce.

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Step 4: c) Determine quantity of beeswax should Nancy produce in order to maximize her profit.

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Step 5: d) Determine how do marginal revenue and marginal cost compare at profit-maximizing level of output.

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