# 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?