Below is a table with the various price and cost (per hour) data of Giyani Solar Specialist

(Pty) Ltd for selling specialised solar-powered hair dryers.

5.1. Complete the table.

Quantity

(000)

Price Marginal

revenue

Fixed

cost

Total

variable

cost

Total

cost

Average

cost

Average

variable

cost

Marginal

cost

0 5 000 0 5 000 0 5 000 0 0 0

1 4 800 200 3 000

2 4 500 300 4 100

TUTORIAL LETTER 1 (ASSIGNMENT 1) - 2020 SECOND SEMESTER

ECO500

MANAGERIAL ECONOMICS

Page 5 of Assignment

Quantity

(000)

Price Marginal

revenue

Fixed

cost

Total

variable

cost

Total

cost

Average

cost

Average

variable

cost

Marginal

cost

3 4 100 400 1 200

4 3 600 500 500

5 3 000 600 9 800

6 2 350 650 5 700

7 1 650 700 12 100

8 900 750 2 200

9 100 800 5 000 2 000

10 0 100 5 000 1 600

(24)

5.2. What price should Giyani Solar Specialist charge to maximise its profit in the short

run? (1)

5.3. Is Giyani a perfect competitor firm? Explain why or why not. (1)

5.4. Why will the firm not be better off if it asks a higher price such as R4 800? (3)

5.5. Why will the firm not be better off if it asks a lower price such as R1 650? (3)