A Firm?s Profit-Maximizing Choices

by writings | Apr 2, 2022 | Economics

In at least 500 words answer the following questions:

Roy is a potato farmer, and the world potato market is perfectly competitive. The market price is $25 a bag. Roy sells 40 bags a week, and his marginal cost is $20 a bag.
1. Calculate Roy?s total revenue.
2. Calculate Roy?s marginal revenue.
3. Is Roy maximizing profit? Explain your answer.
4. The price falls to $18 a bag, and Roy cuts his output to 25 bags a week. His average variable cost and marginal cost fall to $18 a bag. Is Roy maximizing profit? Is he making an economic profit or incurring an economic loss?
5. What is one point on Roy?s supply curve?

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