Nancy sells beeswax in a perfectly competitive market for $50 per pound. Nancy's fixed costs are $15, and Nancy is capable of producing up to 6 pounds of beeswax each year. Use that information to fill in the table below. (Hint: Total variable cost is simply the sum of the marginal costs up to any particular quantity of output!)
a. If Nancy is interested in maximizing her total revenue, how many pounds of beeswax should she produce?
b. What quantity of beeswax should Nancy produce in order to maximize her profit?
c. At the profit-maximizing level of output, how do marginal revenue and marginal cost compare?
d. Suppose that Nancy's fixed cost suddenly rises to $30. How should Nancy alter her production to account for this sudden increase in cost?
e. Suppose that the bee's union bargains for higher wages, making the marginal cost of producing beeswax rise by $8 at every level of output. How should Nancy alter her production to account for this sudden increase in cost?