|
16. At a price of $15 we know, from the table, that Lane sells 6 pizzas. She maximizes profits by selling where MR = MC.
It isn't necessary but it's helpful to compute the MR column for this table. Remember that MR is just the change in revenue due to a change in sales by a single unit, so its just the difference between TR each time sales are increased by a unit. The MR of the 6th pizza is 10 so we know that MC can't be greater than 10, otherwise it would not have been profitable to sell the 6th pizza and she would have raised price to $16 (or more, depending on how much higher it was) and sold 5 (or fewer) pizzas. The MR for the 7th pizza is 8 so if MC were 8 or below she would have lowered price to $14 (or lower) and sold 7 (or more) pizzas.
|
| Q |
P |
TR |
MR |
| 1 |
20 |
20 |
20 |
| 2 |
19 |
38 |
18 |
| 3 |
18 |
54 |
16 |
| 4 |
17 |
68 |
14 |
| 5 |
16 |
80 |
12 |
| 6 |
15 |
90 |
10 |
| 7 |
14 |
98 |
8 |
| 8 |
13 |
104 |
6 |
|
