Demand and Cost Data for Will's Beach Ball Company Table 26.1
A Monopolistically Competitive Firm
$\begin{array}{|r|r|r|r|r|}
\hline&\text { Demand Data }&&\
\text { Price } & \text { Quantity } & \text { Cost Data Output } & \text { Total Cost } \
\hline \$ 11 & 6 & 6 & \$ 48 \
\hline \$ 10 & 7 & 7 & \$ 52 \
\hline\$9&8&8&\$57\
\hline \$ 8 & 9 & 9 & \$63 \
\hline \$7 & 10& 10&\$70 \
\hline
\end{array}$
Refer to Table 26.1.At the profit-maximizing output and price,Will's Beach Ball Company will earn a profit equal to
A)$18.
B)$70.
C)$72.
D)-$12.

Question

Demand and Cost Data for Will's Beach Ball Company Table 26.1
A Monopolistically Competitive Firm
$\begin{array}{|r|r|r|r|r|}
\hline&\text { Demand Data }&&\
\text { Price } & \text { Quantity } & \text { Cost Data Output } & \text { Total Cost } \
\hline \$ 11 & 6 & 6 & \$ 48 \
\hline \$ 10 & 7 & 7 & \$ 52 \
\hline\$9&8&8&\$57\
\hline \$ 8 & 9 & 9 & \$63 \
\hline  \$7 & 10& 10&\$70 \
\hline
\end{array}$
 Refer to Table 26.1.At the profit-maximizing output and price,Will's Beach Ball Company will earn a profit equal to
A)$18.
B)$70.
C)$72.
D)-$12.

Quizplus · Accepted Answer

To find the profit-maximizing output, we need to calculate the marginal cost (MC) and marginal revenue (MR) for each level of output and find where MR = MC. However, without directly calculating MR, we can look at the profit at each output level. Profit is calculated as (Price × Quantity) - Total Cost. For each price level:- At $11: Profit = (11×6) - 48 = $66 - $48 = $18- At $10: Profit = (10×7) - 52 = $70 - $52 = $18- At $9: Profit = (9×8) - 57 = $72 - $57 = $15- At $8: Profit = (8×9) - 63 = $72 - $63 = $9- At $7: Profit = (7×10) - 70 = $70 - $70 = $0The maximum profit of $18 occurs at both price levels $11 and $10 for quantities 6 and 7, respectively. Therefore, the correct answer is that the profit-maximizing output and price will earn a profit equal to $18.