Table 7-1
Table 7-1 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 7-1.If the market price of each camera case is $8,what is the firm's total revenue?
A) $2400
B) $3200
C) $4000
D) $4800

Question

Table 7-1
  Table 7-1 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 7-1.If the market price of each camera case is $8,what is the firm's total revenue?
A) $2400 
B) $3200 
C) $4000 
D) $4800

Quizplus · Accepted Answer

At an output of 100 units, the Total Cost (TC) is $800 and the Total Revenue (TR) is $800. 
At an output of 200 units, the TC is $1600 and TR is $1600. 
At an output of 300 units, the TC is $2400 and TR is $2400. 
At an output of 400 units, the TC is $3200 and TR is $3200. 
At an output of 500 units, the TC is $4000 and TR is $4000. 
At an output of 600 units, the TC is $4800 and TR is $4800.

When the market price of each camera case is $8, the firm's total revenue is equal to the market price multiplied by the quantity sold. Therefore, at an output of 400 units, the total revenue is 400 x $8 = $3200. This is the maximum revenue possible for the firm in the short run. Thus, the best choice for the firm is to produce 400 units of camera cases.

Table 7-1 Table 7-1 Shows the Short-Run Cost Data of Data