Economics: The Basics 1st Edition by Mike Mandel

Exercise 8

Below is the cost function for a bicycle repair shop, including the labor cost for the repair technicians.

a) Fill in the blanks for marginal cost. Is the marginal cost increasing or decreasing?
b) Graph the marginal cost curve.
c) Suppose the market price for repairing a bicycle is $80. Fill in the blanks for the revenue and marginal revenue.
d) How many bicycles must the store repair per day to maximize profits? (Remember the profit-maximizing rule.)e) Now suppose the market price for repairing a bicycle goes up to $100. How many bicycles will the shop repair?