4. Consider total cost and total revenue given in the following table:

Quantity 0 1 2 3 4 5 6 7 Total cost $8 9 10 11 13 19 27 37 Total revenue $0 8 16 24 32 40 48 56

a. Calculate profit for each quantity. How much should the firm produce to maximize profit?

b. Calculate marginal revenue and marginal cost for each quantity. Graph them. (Hint:

Put the points between whole numbers. For example, the marginal cost between 2 and 3 should be graphed at 21

⁄2.) At what quantity do these curves cross? How does this relate to your answer to part (a)?

c. Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?

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