To solve the given problem, we need to determine the profit-maximizing level of output for the firm and then calculate the firm's total revenue at that level of output.
1. Identifying Profit-Maximizing Output:
- The key to profit maximization is to produce the quantity of output where the Marginal Revenue (MR) equals the Marginal Cost (MC), but we stop production when Marginal Cost becomes greater than Marginal Revenue.
- From the provided table:
- At output of 1, MR = \[tex]$16 and MC = \$[/tex]10.
- At output of 2, MR = \[tex]$16 and MC = \$[/tex]11.
- At output of 3, MR = \[tex]$16 and MC = \$[/tex]13.
- At output of 4, MR = \[tex]$16 and MC = \$[/tex]17.
- At output of 5, MR = \[tex]$16 and MC = \$[/tex]21.
By observing the data, we see that the marginal cost first exceeds marginal revenue at an output level of 4 units. Thus, the firm should produce up to 4 units because at this level MR (16) < MC (17). Therefore, at the output level of 4 units, production stops.
2. Calculating Total Revenue:
- Total Revenue (TR) is calculated as follows:
[tex]\[
\text{Total Revenue} = \text{Revenue per Unit} \times \text{Total Output}
\][/tex]
- Given:
[tex]\[
\text{Revenue per Unit} = \$16
\][/tex]
[tex]\[
\text{Total Output} = 4 \text{ units }
\][/tex]
[tex]\[
\text{Total Revenue} = 16 \times 4 = \$64
\][/tex]
Therefore, the firm's total revenue at the profit-maximizing level of output is [tex]\(\$64\)[/tex].
Answer:
[tex]\(\$64\)[/tex].
