COST AND REVENUE ANALYSIS

Cost and Revenue Analysis

COST AND REVENUE ANALYSIS

Professor Popkiss is going to work in an industry that is having monopolistic competition. The reason for this type of environment is because with the increase in the output i.e. number of clocks repaired, the cost is declining. Therefore if Prof Popkiss increases his output he can monopolize his profits and he will be able to capture the market easily. In my opinion it is very good opportunity to enter in this market because, if I have to take the decision then I will definitely enter into this business due to strong knowledge of this work. Capitalizing this market is very easy in current scenario.

Average revenue

Quantity

Total cost

Average cost

Total revenue

Profit Marginal Revenue

Average total cost

Average variable cost

Marginal cost

0

0

800

-

800

800

800.00

0.00

0.00

60

10

820

82.00

820

20

80.00

2.00

2.00

60

20

880

44.00

880

60

40.00

4.00

6.00

60

30

980

32.67

980

100

26.67

6.00

10.00

60

40

1020

25.50

1020

40

20.00

5.50

4.00

60

50

1200

24.00

1200

180

16.00

8.00

18.00

60

60

1460

24.33

1460

260

13.33

11.00

26.00

60

70

1760

25.14

1760

300

11.43

13.71

30.00

60

80

2220

27.75

2220

460

10.00

17.75

46.00

60

90

3000

33.33

3000

780

8.89

24.44

78.00

Calculations

Short Run ATC curve

The graph to the above is the average total cost curve for the short-run production of Professor Popkiss business. The quantity of clocks, measured on the horizontal axis, ranges from 0 to 10 and the average total cost incurred for the repair of clocks is measured on the vertical axis, ranges from about 0 Pounds to over 900 pounds.

According to the Above ATC curve, the profit maximizing point for Professor Popkiss's business is restoring 20 clocks per week. Because at this point his total cost will be minimized. At this point he should charge 90 pounds per clock.5. Graphs

Marginal Cost

Marginal Revenue

Average Revenue

Average Total Cost

6. Under Long Run Professor Popkiss's can earn profit if he restores around 50 clocks per week. At this point his profit will be maximized in long run. At this point the cost and price will significantly decline. If he will repair 50 clocks per week his average total cost will be minimized. It is clearly evident from the graph that when he is repairing 50 clock, his ...