1. $15 (total cost of $450 divided by the 30 rugs)
2. $1350 (P x Q = $45 x 30 rugs)
3. $450 (mentioned in passage)
4. $2025 (P x Q = $45 x 45 rugs, which is the production he desires)
5. $675 ($15, the cost of each rug, x 45, the number of rugs)
6. $15 (MC = change TC divided by change Q = $225 divided by 15)
7. $45 (MR = change TR divided by change Q = $675 divided by 15)
8. $525
- $15 (marginal cost) x 15 rugs = 225
- $20 (charged by ad agency for each rug sold) x
15 rugs = 300
- total of $525
9. $675 (P x Q = $45 x 15 rugs)
10. Yes. TR > TC and profit of $150 will be made)