Question

Daisy's Dolls sold 30,000 dolls this year at $40 each. The company incurred $250,000 of fixed expenses. Each doll's variable cost is $19. What is Daisy's Dolls' net operating income?

Answer 1

Total revenue, marginal revenue, total cost, marginal cost, and profit maximizing quantity for Doggies Paradise Inc.

Step-by-step explanation:

Total revenue is calculated by multiplying the number of units sold by the price per unit. Marginal revenue is the change in total revenue when one additional unit is sold. Total cost is the sum of fixed costs and variable costs. Marginal cost is the change in total cost when one additional unit is produced.

The profit maximizing quantity occurs where marginal revenue equals marginal cost. In this case, it is the quantity that generates the highest profit. To determine the profit maximizing quantity, we need to compare the marginal revenue and marginal cost at different output levels.

Based on the given information, the profit maximizing quantity for Doggies Paradise Inc. is four units. At this output level, the marginal revenue is $72, and the marginal cost is $46.