Question

9. Cost and Revenue functions C(q) and Rq) correspondingly for the company that produces heaters is shown in the figure below. (4+ 4 = 8] 3600+ MR 3200+ 2400+ Ra) 2400+ Marginal cost MR 2000+ 1600+ MC=c 1200- 890 Marginal revenue 30 60 90 120 150 180 210 240 270 300 MRER R (a) Is it a good idea to increase the production level from 90 to 91 heaters? Explain using marginal revenue and marginal cost. Slope of C is less than slope of Marginal cost s Aarginal revenue. We want to increase production, since the next item brings in more revence than it costs to produce. (b) Is it a good idea to increase the production level from 210 to 211 heaters? Explain using marginal revenue and marginal cost.