Answer to Question #59659 in Microeconomics for VICTOR PATINO

Question

Uncle Jose\'s Farm has costs and revenue as seen in the graph below. Uncle Jose knows how well you\'ve been doing in your economics course and has asked for your help in determining how to make as much profit as possible.

Answer 1

If Uncle Jose asked for your help in determining how to make as much profit as possible, so if he works in perfectly competitive market, then he should produce such output, for which marginal revenue equals marginal cost (MR = MC) and sell it at market price. His total profit can be calculated using the formula TP = (P - ATC)*Q, where P - market price, Q - output, ATC - average total cost.