To calculate total revenue, marginal revenue, total cost, and marginal cost for each output level, use a table. The profit maximizing quantity is 4 units.
To calculate the total revenue, marginal revenue, total cost, and marginal cost for each output level, you can use a table as shown below:
Output Level Total Revenue Marginal Revenue Total Cost Marginal Cost
1 $72 $72 $164 $164
2 $144 $72 $228 $64
3 $216 $72 $342 $114
4 $288 $72 $526 $184
5 $360 $72 $796 $270
The profit maximizing quantity is the output level where marginal cost equals marginal revenue. From the table, you can see that the profit maximizing quantity is 4 units.
Complete Question :
A vendor sells hotdogs at $14.00 /piece. For every hot dog he spends $11.58 in the raw material. Additionally he spends $1.13 for packing each hotdog and monthly $45.00, $24.00, $11.00 as food truck rent, electricity and other expenses respectively. How much is the vendor contributing to covering his fixed costs or generating profits?