If market price is $5, how much output will the firm produce? 0 units 200 units
ID: 1097108 • Letter: I
Question
If market price is $5, how much output will the firm produce?
0 units
200 units
500 units.
600 units
If market price is $5, how much profit will the firm earn?
a $600
b. $900
c. $3,000
d. -$600
If market price is $3, how much profit will the firm earn?
a. $200
b. -$200
c. $400
d. -$400
If market price is $2, how much profit will the firm earn?
a. $600
b. -$600
c. zero
d. $400
The firm will break even if price is:
a. $2
b. $3.80
c. $5
d. $6
Explanation / Answer
Q 1. If market price is $5, how much output will the firm produce?
Ans1. 600 units because at this level of output firm will be on equilibrium point i.e. MR=MC.
Q 2. If market price is $5, how much profit will the firm earn?
Ans2. $600 because per unit average total cost at this level is $4 so a profit of $1 per unit and total profit of $600.
Q 3. If market price is $3, how much profit will the firm earn?
Ans3. -$400 because at this level firm will produce 400 units at a cost of $4 per unit, so a loss of $1 per unit.
Q 4. If market price is $2, how much profit will the firm earn?
Ans4. -$600 because at this level firm will produce 200 units at a cost of $5 per unit so a loss of $3 per unit.
Q 5. The firm will break even if price is:
Ans5. $3.80 because at this price firm will produce 500 units and at this level of output Average total cost and average total revenue will be equal and MR=MC.
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