Perfect Competition Inclass Practice-5 points Answer the following questions usi

Question

Perfect Competition Inclass Practice-5 points Answer the following questions using the table below. Show your work to support your answer. Output TC 530 50 80 120 170 230 300 380 470 6 1. If P-$80, how much should this firm produce? a. What's ? If P-$40, how much should this firm produce? a. 2. What's rt? If P-$30, how much should this firm produce? a. What'sn? b. What's TVC? c. What's ATC? 3. If P-$20, how much should this firm produce? a. What's ? b. What's ATC? c. What's TVC? d. What's AVC 4.

Explanation / Answer

Find the other cost functions related to the table using the fact that FC = 30, TVC = TC - VC, AVC = TC/Q, ATC = TC/Q and MC = change in TC/ change in Q

1) When P is 80, MC is 80 at Q = 7 so firm produces 7 units and earn a profit of (80 - 54.29)*7 = 179.97

2) For P = 40, MC is 40 when Q = 3 and at this level ATC is 40. Hence firm earns no profit at this level

3) At P = 30, MC is 30 when Q = 2. ATC is 40 but AVC is 25 so firm can produce but it will have to bear losses. TVC is 80. Profit = (30 - 40)*2 = -20

4) When P = 20, MC is 20 when Q = 1. Firm's AVC is 20. ATC = 50 and TVC = 20. Firm can produce because price = minimum of AVC.

Q FC VC TC AFC AVC ATC MC 0 30 0.00 30.00 1 30 20.00 50.00 30.00 20.00 50.00 20.00 2 30 50.00 80.00 15.00 25.00 40.00 30.00 3 30 90.00 120.00 10.00 30.00 40.00 40.00 4 30 140.00 170.00 7.50 35.00 42.50 50.00 5 30 200.00 230.00 6.00 40.00 46.00 60.00 6 30 270.00 300.00 5.00 45.00 50.00 70.00 7 30 350.00 380.00 4.29 50.00 54.29 80.00 8 30 440.00 470.00 3.75 55.00 58.75 90.00

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.