WGU EGT1 Task 1 Essay Example

EGT1 – TASK 1
Western Governors University
EGT1 Economics and Global Business Applications

Element A1 & A2
A1. Total revenue (TR) to total cost (TC) is cost, which is calculated using total revenue minus the total cost, (TR-TC). As each unit is produced, the total cost increases in addition to the total revenue. Yet, at some point in the production of the additional units, the total revenue will exceed the total cost. When it reaches that point, it becomes a loss. The point when profit maximization is the largest is bolded in the table below.
QTY
TR
TC
TR-TC
0
$0.00
$100.00
-$100.00
1
$131.00
$190.00
-$59.00
2
$262.00
$270.00
-$8.00
3
$393.00
$340.00
$53.00
4
$524.00
$400.00
$124.00
5
$655.00
$470.00
$185.00
6
$786.00
$550.00
$236.00
7
$917.00
$640.00
$277.00
8
$1,048.00
$750.00
$298.00
9
$1,179.00
$880.00
$299.00
10
$1,310.00
$1,030.00
$280.00

A2. Marginal revenue (MR) is extra profit a company makes selling one more unit of a product. Marginal cost (MC) is the expenditure to the company to produce one more product. This is calculated taking the total cost (TC) of the last product made and subtracting the total cost (TC) of the product before that. The graph shows, it costs $30 to make one product and $50 to make two. (MC) is $50 minus $30, equalling $20. (MC) goes up $10 for every additional product. This increases from making one product up until eight. The profit is at a maximum at this point (Line 8 Bolded). The marginal revenue (MR) then decreases with each additional product made after the eighth. ("marginal cost," 2013)
QTY
TR
TC
MR
MC

0
$0.00
$10.00
-$10.00

1
$150.00
$30.00
$150.00
$20.00

2
$290.00
$50.00
$140.00
$20.00

3
$420.00
$80.00
$130.00
$30.00

4
$540.00
$120.00
$120.00
$40.00

5
$650.00
$170.00
$110.00
$50.00

6
$750.00
$230.00
$100.00
$60.00

7
$840.00
$300.00
$90.00
$70.00

8
$920.00
$380.00