6. Next calculate marginal revenue, knowing that it is the difference between the revenue at the price
shown and the revenue at 1/400 of a cent less. Calculate 1/400 of a cent as well as the new price.
Calculate the marginal cost of selling one more gallon at each price. Prove that MC = $2.649
Prove to Cal that MR = MC at the maximum profit.
Complete the table to the right.
Gallons
sold per
day
Price
Revenue (price x
gallons)
3,600 $2.759000
$9,932.40
3,601 $2.758975
4,000 $2.749000
4,001
4,400 $2.739000
4,401
4,800 $2.729000
4,801
5,200 $2.719000
5,201
Marginal
revenue
Cost per
gallon
Variable Cost
Fixed Cost
Total Cost Marginal Cost
$2.649
$9,536.40
$250.00
$9,786.40
7. Does MC = MR at the maximum profit point?
Supply and Demand Graph
Profit Maximization