Pearl owns a company that produces Super Toys. The table above shows that Pearls' Fixed Cost is $3000.00. Pearl pays $1,250 for each unit of labor. Marginal and Average Costs of production are show n in the table. If Pearl conducts business in a Perfectly Competitive Market, where the price of each toy sold is $125.00:

1. What is Pearl's Marginal Revenue for each additional unit of Super Toy sold?

2. What is the Profit Maximizing number of Toys that Pearl should produce?

3. What is the Total Profit at this Profit Maximizing number of toys?

MEDGAR EVERS COLLEGE (CUNY)

SCHOOL OF BUSINESS

ECON 213 PRINCIPLES OF MICROECONOMICS

WINTER2010

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Total Cost (TC) 3,000.00 S4,250.00 S5,500.00 6,750.00 8,000.00 9,250.00 S10,500.00 S11,750.00 S13,000.00 S14,250.00 S15,500.00 S16,750.00 S18,000.00 $19.250.00 Marginal Cost (MC) Average 2 Total Revenue P=125 Labor Output S1,250.00 S3,125.00 $5,625.00 $8.750.00 $11,875.00 $14.375.00 $16.625.00 $18.625.00 $20,500.00 S21,750.00 $22.750.00 S23,500.00 $24,000.00 10 25 45 70 125.00 S83.33 S62.50 S50.00 S50.00 S62.50 S69.44 S78.13 S83.33 125.00 S156.25 S208.33 312.50 $425.00 S220.00 $150.00 S114.29 $97.37 S91.30 $88.35 $87.25 $86.89 S89.08 S92.03 S95.74 $100.26 115 133 149 164 182 188 192 13