ECON 100 "Fuzzy Slipper" Question

St Charles Community College
ECON 100  Survey Economics
Class Discussion Question


Tim and Tammy own a small, perfectly competitive, manufacturing company named Cozy Feet, Ltd that produces and sells fuzzy bedroom slippers. The prices, costs, and outputs of their small firm are represented by the data in the following graph and table: 

 
Fuzzy Slipper Financial Data 

Quantity Produced (Pairs per Mo.)
Fixed Costs ($)
Variable Costs ($)
Total Costs ($)
Marginal Costs ($ per Pair)
Average Total Cost ($ per Pair)
Price per Pair ($)
Total Revenue ($)
Marginal Revenue 
($ per pair)
Profit ($)
0
600
0
600


8.00
0
0
0
200
600
600
1200
3.00
6.00
8.00
1600
8.00
400.00
400
600
1400
2000
4.00 
5.00
8.00
3200
8.00
1200.00
600
600
2500
3100
5.50
5.17
8.00
4800
8.00
1698.00
800
600
3900
4500
7.00
5.63
8.00
6400
8.00
1896.00
1000
600
5500
6100
8.00
6.10
8.00
8000
8.00
1900.00
1200
600
7500
8100
10.00
6.75
8.00
9600
8.00
1500.00


Questions:

  1. What is the profit maximizing output of the firm per month? Explain your answer.
  2. What is the total revenue of the firm per month at that profit maximizing output?
  3. Why would Tim and Tammy not choose to raise their production per month to the level of 1,200 pairs?
  4. What is their profit at an output of 400 pairs per month?
  5. When the firm expands its output from 800 pairs per month to 1000 pairs per month, what will happen to their profit?