The following data are collected for a computer manufacturer company:
Quantity Price per unit Total cost of production
0 $225,000 $200,000
1 225,000 250,000
2 175,000 275,000
3 150,000 325,000
4 125,000 400,000
5 90,000 500,000
a) If output rises from 2 to 3 units, what is the marginal revenue?
b) If output rises from 4 to 5 units, what is the marginal cost?
c) What is the company's fixed cost?
d) How many units should be produced to maximize total revenue?
e) How many units should be produced to maximize profit?
f) How do this company's marginal costs behave as output increases?
g) Provide a logical explanation as to why a computer manufacturer's marginal costs might behave in this way.