Question

A manufacturer has costs and revenues for producing units. The cost of producing 200 units is 2,265, and the marginal cost at that production level is8.6 per unit. The revenue from producing 200 units is 5,577, and the revenue at that production level is decreasing by2.2 per unit. Estimate the profit when producing 204 units.

Answer 1

To estimate the profit when producing 204 units, calculate the total cost and revenue. The total cost of producing 204 units is $2,299.4 and the revenue from producing 204 units is $5,568.2. The profit when producing 204 units is $3,268.8.

Step-by-step explanation:

To estimate the profit when producing 204 units, we need to calculate the total cost and total revenue.

Given that the cost of producing 200 units is $2,265 and the marginal cost is $8.6 per unit, we can calculate the total cost by adding the cost of the additional 4 units: 4 units x $8.6 = $34.4. Therefore, the total cost of producing 204 units is $2,265 + $34.4 = $2,299.4.

The revenue from producing 200 units is $5,577 and the revenue is decreasing by $2.2 per unit. To calculate the revenue from producing 204 units, we can subtract the decrease in revenue for the additional 4 units: 4 units x $2.2 = $8.8. Therefore, the revenue from producing 204 units is $5,577 - $8.8 = $5,568.2.

To calculate the profit, we need to subtract the total cost from the total revenue: $5,568.2 - $2,299.4 = $3,268.8.