Final answer:
The question seeks to examine a perfectly competitive firm's financial measures by determining total revenue, marginal revenue, total cost, and marginal cost. It also requires sketching the total revenue and total cost curves, along with marginal revenue and marginal cost curves, to identify the profit-maximizing output for Doggies Paradise Inc.
Step-by-step explanation:
The question involves calculating several economic measures to evaluate the performance and decision-making for a perfectly competitive firm, Doggies Paradise Inc. We will calculate the total revenue, marginal revenue, total cost, and marginal cost for output levels from one to five units.
This information will lead us to determine the profit-maximizing quantity and to sketch the respective revenue and cost curves. For this company, the profit-maximizing quantity is where marginal revenue equals marginal cost, an essential principle in microeconomics for analyzing firms' behavior in competitive markets.
To determine the total cost for each output level, we must add the fixed cost of $100 to the given variable costs. The total revenue is calculated by multiplying the number of units sold by the price per unit ($72). Marginal revenue remains constant at $72 per additional unit because it's a perfectly competitive market.
To calculate the marginal cost, we find the difference in total cost when an additional unit is produced. This analysis allows us to sketch two diagrams: one depicting the total revenue and total cost curves, and another showing marginal revenue and marginal cost curves.