Managerial Economics

Activity 1 – Extent (How Much Decisions) 10 points each

1. Sal’s Pizza Shop has a unique recipe for pizza, and currently its optimal price is P20 per pizza at a
quantity of 200 pizzas/week. Its marginal cost is P12/pizza when it produces fewer than 180
pizzas/week. The marginal cost is P15/pizza when it produces 180 to 210 pizzas/week. The
marginal cost is P18/pizza when it produces between 211 and 300 pizzas/week. The staff cannot
produce more than 300 pizzas/week. Assuming that fixed costs are P300/week, its marginal
revenue from the 200th pizza sold this week is: _____

2. A sofa manufacturer can produce 10 sofas for P2,500 and 12 sofas for P2,760. What is the
difference between the average cost per sofa for 12 sofas and the marginal cost of the 12th sofa?

3. A firm can hire 10 workers at a wage of P10 but has to pay a wage of P12 to get 11 workers.
What is the marginal cost of the 11th worker?

Good luck!