Question

Bozzo's burgers are a small restaurant and a price taker. The table below provides the data of Bozzo's output and costs in Rupees.

QTY.	0	10	20	30	40	50	60
T.C	100	210	300	400	540	790	1060
TFC
TVC
AVC
ATC
MC

If burgers sell for Rs. 14 each, what is Bozo's profit maximizing level of output:

• A. 10 burgers
• B. 40 burgers
• C. 50 burgers
• D. 60 burgers

Answer 1

The correct option is B 40 burgers

QTY.	0	10	20	30	40	50	60
T.C	100	210	300	400	540	790	1060
TFC	100	100	100	100	100	100	100
TVC	0	110	200	300	440	690	960
AVC	0	11	10	10	11	13.8	16
ATC	0	21	15	13.33	13.5	15.8	17.67
MC (1 unit)	0	11	9	10	14	25	27

The conditions for Profit Maximisation is $MC=MR$.

For one unit, $MR=Price=14$

This $MR$ is equal to the $MC$ at unit 1 of Qty. $40$

Thus, $MC=MR$ at profit maximisation point at $40$ Burgers.