Y7

The table below gives you information on the revenue and cost structures of the Vaca family dairy farm. The farm is a supplier in a perfectly competitive market. 1. For different quantities produced, complete the below table: Quantity Price Total Cost Total Average Marginal Marginal Revenue Revenue Revenue Cost Profit Change in (TC) Profit (Q) (P) (TR) (AR) (MR) (MC) 0 $3 1 gal. 6 5 2 6 8 3 6 12 4 6 17 5 6 22.5 6 6 29 7 6 36 2. Why is the price unchanged with the quantity sold?3. What is happening to Marginal revenue as Q increases? Why? 4. What is happening to Marginal cost as Q increases? Why? 5. What is the profit maximizing quantity of output? Explain the general rule for profit maximization based on the idea of rational decision making