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Author Question: How is total revenue calculated? If a firm sells 350 units of a product at a price of 8 each, what ... (Read 77 times)

cartlidgeashley

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on: Jun 29, 2018
How is total revenue calculated? If a firm sells 350 units of a product at a price of 8 each, what is the firm's total revenue?
 
  What will be an ideal response?

Question 2

When Peter's Pizza Company produces 50 pizzas, its average total cost is 8 . The marginal cost of the 51st pizza is 7 . If the firm chooses to produce the 51st pizza, what will happen to average total cost? Explain.
 
  What will be an ideal response?


CAPTAINAMERICA

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Total revenue is calculated by taking the quantity of a product sold and multiplying by its price. Thus, the firm's total revenue is 350  8 = 2,800.

Answer to Question 2

If the firm decides to produce the 51st pizza, its average total cost will fall because the marginal cost is lower than the average total cost.


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