supply: thinking like a seller — work it out miker, a manufacturer of generic medications, is deciding how…

supply: thinking like a seller — work it out miker, a manufacturer of generic medications, is deciding how much to charge retailers for their generic acetaminophen (tylenol). the marginal cost for each bottle is provided in the accompanying table.\n| quantity of acetaminophen (thousand bottles) | marginal cost (per bottle) |\n|----|----|\n| 1 | $6.00 |\n| 2 | $7.00 |\n| 3 | $7.75 |\n| 4 | $8.25 |\n| 5 | $9.00 |\n| 6 | $9.50 |\nif the price of a bottle is $7.75, how many thousand bottles would miker produce each day? what about if the price is $9.00 per bottle?\nproduction at $7.75: thousand bottles production at $9.00: thousand bottles

supply: thinking like a seller — work it out miker, a manufacturer of generic medications, is deciding how much to charge retailers for their generic acetaminophen (tylenol). the marginal cost for each bottle is provided in the accompanying table.\n| quantity of acetaminophen (thousand bottles) | marginal cost (per bottle) |\n|----|----|\n| 1 | $6.00 |\n| 2 | $7.00 |\n| 3 | $7.75 |\n| 4 | $8.25 |\n| 5 | $9.00 |\n| 6 | $9.50 |\nif the price of a bottle is $7.75, how many thousand bottles would miker produce each day? what about if the price is $9.00 per bottle?\nproduction at $7.75: thousand bottles production at $9.00: thousand bottles

Answer

Explanation:

Step1: Recall profit - maximization rule

A firm will produce where price (P) is at least equal to marginal cost (MC). When P = MC or P>MC, the firm will produce the additional unit.

Step2: Find production at $7.75

When the price per bottle P = $7.75, looking at the table, the marginal cost is $7.75 when the quantity is 3 thousand bottles. Since producing the 3 - thousandth bottle has a marginal cost equal to the price, the firm will produce 3 thousand bottles.

Step3: Find production at $9.00

When the price per bottle P = $9.00, looking at the table, the marginal cost is $9.00 when the quantity is 5 thousand bottles. Since producing the 5 - thousandth bottle has a marginal cost equal to the price, the firm will produce 5 thousand bottles.

Answer:

Production at $7.75: 3 thousand bottles Production at $9.00: 5 thousand bottles