Final answer:
The question involves calculations and graphing for total revenue, marginal revenue, total cost, and marginal cost to find the profit-maximizing quantity for a perfectly competitive firm selling dog winter coats.
Step-by-step explanation:
The question pertains to a perfectly competitive firm (Doggies Paradise Inc.) dealing in selling dog winter coats. The scenario given involves computing various economic elements such as total revenue, marginal revenue, total cost, and marginal cost across different output levels. Additionally, determining the profit-maximizing quantity is crucial in this context.
For each unit sold (one to five), total revenue is calculated by multiplying the quantity by the sale price (which is $72). Marginal revenue in a perfectly competitive market equals the sale price. Total cost is the sum of fixed cost and variable cost at each quantity. Marginal cost is computed as the change in total cost when an additional unit is produced. To maximize profit, firms should produce up to the quantity where marginal cost equals marginal revenue. Graphically, this can be identified where the marginal revenue curve intersects the marginal cost curve or where the total revenue curve is furthest from the total cost curve.