Chapter 8: Problem 39
The AAA Aquarium Co. sells aquariums for \(\$ 20\) each. Fixed costs of production are \(\$ 20 .\) The total variable costs are \(\$ 20\) for one aquarium, \(\$ 25\) for two units, \(\$ 35\) for the three units, \(\$ 50\) for four units, and \(\$ 80\) for five units. In the form of a table, calculate total revenue, marginal revenue, total cost, and marginal cost for each output level (one to five units). What is the profit-maximizing quantity of output? On one diagram, sketch the total revenue and total cost curves. On another diagram, sketch the marginal revenue and marginal cost curves.