The following table shows the average cost and average revenue (price) for a firm at each level of output.\n \n\n\n\n\n\nOutput\n\n\n1\n\n\n2\n\n\n3\n\n\n4\n\n\n5
The following table shows the average cost and average revenue (price) for a firm at each level of output.
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\r\n\r\nOutput\r\n | \r\n\r\n 1 \r\n | \r\n\r\n 2 \r\n | \r\n\r\n 3 \r\n | \r\n\r\n 4 \r\n | \r\n\r\n 5 \r\n | \r\n\r\n 6 \r\n | \r\n\r\n 7 \r\n | \r\n\r\n 8 \r\n | \r\n\r\n 9 \r\n | \r\n\r\n 10 \r\n | \r\n
| \r\n AC (£) \r\n | \r\n\r\n 7.00 \r\n | \r\n\r\n 5.00 \r\n | \r\n\r\n 4.00 \r\n | \r\n\r\n 3.30 \r\n | \r\n\r\n 3.00 \r\n | \r\n\r\n 3.10 \r\n | \r\n\r\n 3.50 \r\n | \r\n\r\n 4.20 \r\n | \r\n\r\n 5.00 \r\n | \r\n\r\n 6.00 \r\n | \r\n
| \r\n AR (£) \r\n | \r\n\r\n 10.00 \r\n | \r\n\r\n 9.50 \r\n | \r\n\r\n 9.00 \r\n | \r\n\r\n 8.50 \r\n | \r\n\r\n 8.00 \r\n | \r\n\r\n 7.50 \r\n | \r\n\r\n 7.00 \r\n | \r\n\r\n 6.50 \r\n | \r\n\r\n 6.00 \r\n | \r\n\r\n 5.50 \r\n | \r\n
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(a) Construct a table to show TC, MC, TR and MR at each level of output (put the figures for MC and MR mid-way between the output figures).
\r\n(b) Using MC and MR figures, find the profit-maximising output.
\r\n(c) Using TC and TR figures, check your answer to (b).
\r\n(d) Plot the AC, MC, AR and MR figures on a graph.
\r\n(e) Mark the profit-maximising output and the AR and AC at this output.
\r\n(f) Shade in an area to represent the level of profits at this output.
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