Table 9-1
$$\begin{array} { | c | c | c | }
\hline \text { Quantity } & \begin{array} { c }
\text { Total Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c }
\text { Variable Cost } \
\text { (dollars) }
\end{array} \
\hline 0 & \$ 1,000 & \$ 0 \
\hline 100 & 1,360 & 360 \
\hline 200 & 1,560 & 560 \
\hline 300 & 1,960 & 960 \
\hline 400 & 2,760 & 1,760 \
\hline 500 & 4,000 & 3,000 \
\hline 600 & 5,800 & 4,800 \
\hline
\end{array}$$
Table 9-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units.
-Refer to Table 9-1.If the market price of each camera case is $8,what is the profit-maximizing quantity?

Question

Table 9-1
 $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \begin{array} { c } 
\text { Total Cost } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { (dollars) }
\end{array} \
\hline 0 & \$ 1,000 & \$ 0 \
\hline 100 & 1,360 & 360 \
\hline 200 & 1,560 & 560 \
\hline 300 & 1,960 & 960 \
\hline 400 & 2,760 & 1,760 \
\hline 500 & 4,000 & 3,000 \
\hline 600 & 5,800 & 4,800 \
\hline
\end{array}$$ 
Table 9-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units.
-Refer to Table 9-1.If the market price of each camera case is $8,what is the profit-maximizing quantity?

Quizplus · Accepted Answer

To determine the profit-maximizing quantity, we need to compare the market price with the marginal cost of each level of output. The marginal cost can be calculated as the change in total cost divided by the change in output. Using the data in the table, we can calculate the marginal cost at each level of output:

- At 100 units, the marginal cost is $360 / 100 = $3.60
- At 200 units, the marginal cost is $200 / 100 = $2.00
- At 300 units, the marginal cost is $400 / 100 = $4.00
- At 400 units, the marginal cost is $800 / 100 = $8.00
- At 500 units, the marginal cost is $1,240 / 100 = $12.40
- At 600 units, the marginal cost is $1,800 / 100 = $18.00

Since the market price is $8, we can see that producing anything above 400 units would result in a marginal cost that is higher than the market price. Therefore, the profit-maximizing quantity is 400 units.

Table 9-1 Table 9-1 Shows the Short-Run Cost Data of a Perfectly