Let's find the profit for each case:
1. Price= $ 10, Quantity= 16, Total Cost: $ 100
Revenue= Price x Quantity = 10 x 16 = $ 160
Profit = Revenue - Total Cost = 160 - 100 = $ 60
2. Price= $ 10, Quantity= 17, Total Cost: $ 105
Revenue= Price x Quantity = 10 x 17 = $ 170
Profit = Revenue - Total Cost = 170 - 105 = $ 65
3. Price= $ 10, Quantity= 18, Total Cost: $ 112
Revenue= Price x Quantity = 10 x 18 = $ 180
Profit = Revenue - Total Cost = 180 - 112 = $ 68
4. Price= $ 10, Quantity= 19, Total Cost: $ 121
Revenue= Price x Quantity = 10 x 19 = $ 190
Profit = Revenue - Total Cost = 190 - 121 = $ 69
5. Price= $ 10, Quantity= 20, Total Cost: $ 132
Revenue= Price x Quantity = 10 x 20 = $ 200
Profit = Revenue - Total Cost = 200 - 132 = $ 68
6. Price= $ 10, Quantity= 21, Total Cost: $ 145
Revenue= Price x Quantity = 10 x 21 = $ 210
Profit = Revenue - Total Cost = 210 - 145 = $ 65
The profit is maximized when the price is $ 10, quantity is 19 and the total cost is $ 121.
Definitions:
1. Price is the amount of money that allows the acquisition or use of a good or service.
2. Total cost is the economic cost that represents the manufacture of a product or the provision of a service.
3. Income is the total amount of money earned or collected.
4. Profit is the amount of money that is earned, after subtracting the total costs.
I hope I can be of help. Ok, lets start.
P is the price people pay for the product. Q is the quantity of the product that you sell and TC is the total cost of the production, marketing, logistics, etc to the company. Each row represents a period of time.
The formula to calculate profit is (P x Q) - TC
Row 1: (10.00 x 16 = 160) - 100 = 60
Row 2: (10.00 x 17 = 170) - 105 = 65
Row 3: (10.00 x 18 = 180) - 112 = 68
Row 4: (10.00 x 17 = 190) - 121 = 69 Â This is the profit maximizing level of output for the firm in the short run
Row 5: (10.00 x 17 = 200) - 132 = 68
Row 6: (10.00 x 17 = 210) - 145 = 65
