Final answer:
To find the total variable cost at the profit-maximizing level of output, we look at the total variable cost for the output level where marginal cost equals marginal revenue. In this case, the profit-maximizing quantity is three units and the total variable cost at this level is $35.
Step-by-step explanation:
To determine the profit-maximizing quantity of output, we need to compare the marginal revenue and marginal costfor each output level. The profit-maximizing quantity is where marginal revenue equals marginal cost.
To calculate the total variable cost at the profit-maximizing level of output, we need to examine the total variable costs for each output level. In this case, we need to refer to the provided information about AAA Aquarium Co.'s total variable costs.
According to the information given, the total variable costs are $20 for one aquarium, $25 for two units, $35 for three units, $50 for four units, and $80 for five units. To find the total variable cost at the profit-maximizing level of output, we need to identify the corresponding cost for that level. In this case, since the profit-maximizing quantity is not specifically mentioned, we'll assume it refers to the output level where the firm maximizes its profit by producing the most efficient quantity given the costs involved. So, the profit-maximizing quantity could be the level where marginal cost equals marginal revenue.
To find the profit-maximizing quantity, let's first calculate the marginal cost for each output level to identify where it equals marginal revenue:
- For one unit, the marginal cost is $20
- For two units, the marginal cost is $5
- For three units, the marginal cost is $10
- For four units, the marginal cost is $15
- For five units, the marginal cost is $30
From this, we can see that the profit-maximizing quantity of output is three units since that is the level where marginal cost is equal to marginal revenue. Therefore, to find the total variable cost at the profit-maximizing level of output, we look at the total variable cost for three units which is $35.
So, the total variable cost at the profit-maximizing level of output for Murakami Oyster Company would be $35.