Part I: Single Investor-Owned Firm

Complete the following for a single investor-owned firm.

1.Define total revenue (TR), marginal revenue (MR), and the profit-maximizing rule.

2.Calculate MR, MC, and ATC for Table 3.1.

3.Give the profit-maximizing level of output (Q).

Part II: Tax-Exempt Agency

Now, assume the firm is a tax-exempt agency. One possibility is that tax-exempt agencies maximize output.

1.Define the output-maximization rule.

2.Give the output-maximizing level of output (Q) in Table 3.1.

3.Explain what happens to the supply curve for an output-maximizing firm if it increases the quality of their visits.

Table 3.1 Quantity of Total Revenue Marginal Total Costs (TC) Marginal Average Visits (Q) (TR) Revenue (MR) Cost (MC) Total Cost (ATC) 0 --- 100 --- 200 200 2 400 350 600 550 4 800 800 5 1000 1100