# Wgu Egt Task 1

Submitted By hks2820
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A. Profit maximization can be calculated from the following 2 approaches:
1. Total Revenue to Total Cost (TR/TC) approach
a. Total revenue is calculated by multiplying price times quantity (TR = P x Q)
b. Total cost can be calculated a variety of ways, i.e. fixed (TFC) and variable (TVC) costs and also capital and labor composition costs (TC = TFC + TVC)
c. Profit is total revenue minus total cost (TR-TC)
d. In order to maximize profit, need to find largest gap between total revenue and total cost (TR & TC)
2. Marginal revenue to marginal cost (MR/MC) approach
a. Instead of looking for the largest gap in a profit maximization direction, you need to equate marginal revenue is equated to marginal cost (MR = MC)
b. The term “Marginal” means next incremental unit
c. Marginal revenue is the change that takes place in total revenue divided by the change in quantity (MR = ∆TR/∆Q)
d. Marginal Cost is the change that occurs in the total cost divided by the change in quantity (MC = ∆TC/∆Q) B. The calculation used to determine marginal revenue is MR = ∆TR/∆Q, where MR = Marginal Revenue, ∆TR = Change in Total Revenue and ∆Q = Change in Quantity.
1. Marginal Revenue increases when Company A goes from producing no widgets to 1 widget.
2. Marginal Revenue decreases when Company A produces 2 or more additional widgets, which is indicative of a monopolistic market.
3. Marginal Revenue remains constant only when there is a perfect (pure) market.

Quantity TR MR
0 \$0.00 \$0
1 \$150.00 \$150
2 \$290.00 \$140
3 \$420.00 \$130
4 \$540.00 \$120
5 \$650.00 \$110
6 \$750.00 \$100
7 \$840.00 \$90
8 \$920.00 \$80
9 \$990.00 \$70
10 \$1,050.00 \$60
11 \$1,100.00 \$50
12 \$1,140.00 \$40
13 \$1,170.00 \$30
14 \$1,190.00 \$20
15 \$1,200.00 \$10

C. The calculation used to determine marginal cost is MC = ∆TC/∆Q, where MC = Marginal Cost, ∆TC = Change in Total…...

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