00:01
So let's go over this question.
00:20
At the price of $12 .50 per jumpsuit, we're going to draw a line at $12 .50.
00:35
So this is going to be our marginal revenue, which is equal to price equal to demand.
00:47
This is also equal to average revenue.
00:52
So at $12 .50, we're going to see where marginal revenue is equal to marginal cost.
00:59
And we want to pick the bigger quantity.
01:04
So looking at this line, we see that our quantity is 8 ,000 jumpsuits.
01:25
To get total revenue, we multiply price times the quantity.
01:33
Our price is $12 .50.
01:34
The quantity we found was 8 ,000.
01:49
So our total revenue is $100 ,000.
01:58
To get our variable costs, we need to find the average variable cost.
02:02
So here we're actually at the lowest point of average variable cost, where it crosses with marginal cost.
02:17
So we're producing 8 ,000 jumpsuits.
02:23
And then we need to find average variable cost.
02:37
So looking at this again, it looks like the quantity might actually be lower than 8 ,000.
02:43
So it looks like it's closer to 7 ,500.
03:18
So then at this quantity, the average variable cost is $12 .50.
03:34
So average variable cost times the quantity will give us the variable cost.
03:43
So our quantity is 7 ,500.
03:46
And drawing a line up to average variable cost, the cost is $12 .50.
03:58
So then you see total revenue is equal to our variable cost.
04:06
So then we need our profit.
04:12
That's total revenue minus total cost.
04:13
So here we're operating at a loss because of the fact we are actually at the shutdown point.
04:19
So it makes sense we are operating at a loss.
04:23
So for the total cost, we have to draw a line up to average total cost from the quantity that we're looking at.
04:37
So that ends up being 30 for average total cost.
04:44
Total cost is equal to average total cost times the quantity.
04:48
So that's 30 times the quantity.
05:04
Then we need to find the difference.
05:27
So then the price is $27 .50.
05:36
So at $27 .50, if we draw a line there, we end up at the lowest point of average total cost where it crosses with marginal cost.
05:58
So then we need to find the quantity.
06:01
So we see these cross at 10 ,000 jumpsuits.
06:15
For total revenue, we know total revenue is average price times the quantity.
06:32
So our price is $27 .50.
06:38
The quantity we produce is 10 ,000.
06:57
Then we need our variable cost.
06:59
So we need to see where this or what our average variable cost is at this quantity.
07:09
So at 10 ,000, we draw a line up to the average variable cost.
07:13
So then we end up getting 14 for the average variable cost.
07:23
To get the variable cost, take average variable cost multiplied by the quantity.
07:30
So our average variable cost was determined to be 14...
