Given a numeric production schedule, you will calculate profit and make decisions about short-run profitability to answer questions relating to your calculations. Jerry's Lock Shop is a perfectly competitive firm, and Jerry is operating at his level of output, which maximizes profit. He can change locks for 20 different customers per day and charges each customer $35 for each lock. His total cost of changing locks is $800 and his fixed cost is $160.
Answer the following questions. For each question, show the formula and the calculation as well as the final answer.
a. What is Jerry's marginal cost? Explain how you arrived at that answer.
b. Calculate Jerry's profit.
c. Advise Jerry regarding his short-run decision to produce. Explain how you arrived at that answer.
d. Advise Jerry regarding his long-run decision to produce. Explain how you arrived at that answer.