Maplewood and the birdhouse factory, shed, are for the birds. N.P has received her first orders for the birdie condo. Unfortunately, her father need his power tools. Now she is back to the old production function with hand tools.We will explore profit maximization in this worksheet.

Just like before, her friends are $20 per day and she must pay her parents $100 for rent to be allowed to use the shed, the tools, and wood pile in the back yard. The improved situation with the power tools is below.The current price for birdhouses is $10.Fill in the blanks below.

Units of the Variable Factor (Labor)	Total Product (TP)	Fixed Costs (FC)	Variable Costs (VC)	Total Costs (TC)	Total Revenue (TR)	Total Profit (p)
0	0	100	0	100
1	2	100	20	120
2	7	100	40	140
3	15	100	60	160
4	25	100	80	180
5	40	100	100	200
6	50	100	120	220
7	58	100	140	240
8	63	100	160	260
9	65	100	180	280
10	66	100	200	300

1. What is the maximum profit she can earn?

1. At what production level are profits maximized?

1. What demand-side change would increase her profits?Provide a hypothetical example.

1. What supply-side change would increase her profits?Provide a hypothetical example.

Graph the Total Cost and the Total Revenue. Show the profit maximizing output.

300

200

100

5 10 15 20 25 30 35 40 45 50 55 60 65 70

1. Assume that the price of birdhouses has increased.Which curve will be affected?

1. Draw a new total revenue curve to illustrate an increase in price. Find the new profit maximizing point.

1. Assume that N.P parents realize that the wood pile is shrinking. They decide to increase the rent on the shed and all of the materials. Which curve will be affected?

1. Draw a new total cost curve to illustrate an increase in costs. Find the new profit maximizing point.