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Chapter 8: Q3 (page 210)

Look at Table 8.13. What would happen to the firm’s profits if the market price increases to $6 per pack of raspberries?

Short Answer

Expert verified

No change will happen to firm's profits if market price change to $6.

Step by step solution

01

Definitions 

Price is the amount of money charged for a good or service.

Total revenue is the total amount received from sale of all units of goods and services

So, Total Revenue = Price x Quantity

02

Numerical Solution

Price = Total Revenue / Quantity

Price at following units :

  • 10 units = 60/ 10 = 6
  • 20 units = 120/ 20 = 6
  • 30 units = 180/ 30 = 6
  • 40 units = 240/ 40 = 6
  • 50 units = 300/ 50 = 6
  • 60 units = 360/ 60 = 6
  • 70 units = 420/ 70 = 6
  • 80 units = 480 / 80 = 6
  • 90 units = 540 / 90 = 6
  • 100 units = 600 / 100 = 6

As price is already 6, there will be no change in profit, ie = Total Revenue - Total Cost

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