You are a manager at Spacely Sprocketsa small firm that manufactures type a and Type B bolts.The accounting and marketing departments have provided you with the following information about the per-unit costs and demand for type a bolts over a one-month time period:

Materials and labor are obtained in a competitive market on an as-needed basis, and the reported costs per unit for materials and labor are constant over the relevant range of output.The reported unit overhead costs reflect the $10 spent last month on machines, divided by the projected output of 2 units that was planned when the machines were purchased.In addition to the above information you know that the firm's assembly lines can produce no more than 5 bolts.Since the firm also makes Type B bolts, this means that each type a bolt reduces the number of Type B bolts that can be produced by one unit; the total number of type a and B bolts cannot exceed 5 units.A call to a reputable source has revealed that unit costs for producing Type B bolts are identical to those for producing type a bolts, and that Type B bolts can be sold at a constant price of $4.75 per unit.

1)Determine your relevant marginal cost and marginal revenue of producing Type A and Type B bolts.Set up a

table with a column for Marginal Cost and a column for Marginal Revenue based on the information above.

2)What is the profit-maximizing rate of output of Type A and Type B bolts?

3)How much profit will the firm earn at the profit-maximizing rate of output?

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