Question

Table 1 Quantity of boats Total Cost ($millions) Total Revenue ($millions) 0 0 0 1 7 12 2 15 23 3 25 32 4 35 36

          Table 1
Quantity of
boats
Total Cost
($millions)
Total Revenue
($millions)
0
0
0
1
7
12
2
15
23
3
25
32
4
35
36

Added by Anthony A.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Lottie Adams

Step 1

We can do this by subtracting the total cost of the previous quantity from the total cost of the current quantity. Quantity of boats: 0 1 2 3 4 Total Cost ($millions): 0 7 15 25 35 Marginal Cost ($millions): 7-0 = 7, 15-7 = 8, 25-15 = 10, 35-25 = 10 To Show more…

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Table 1 below shows the total cost and total revenue for a small company selling luxury boats. (a) Calculate both the company's marginal cost and marginal revenue for the quantity of boats shown in Table 1. Present the results of your calculations in tabular form. (b) Using marginal analysis to reach a decision, how many boats should the company sell? Explain your answer. Table 1 Quantity of boats 0 1 2 3 4 Total Cost ($millions) 0 7 15 25 35 Total Revenue ($millions) 0 12 23 32 36