solution

The Top Notch Grill’s marginal costs of producing take-out meals are described below.

a. Assuming that the Grill has fixed costs of $7, what is its total cost at each level of production? (Add a column to the table.)

b. Assume that meals sell for $10 each and the Grill is a perfectly competitive firm. What are the Grill’s total revenue (price × quantity), marginal revenue, and total profit (total revenue – total cost) at each level of production? (Add three more columns to the table.)

c. How many meals should the Grill produce, to maximize profits? Explain in a sentence or two how you arrived at your answer.