Using the data in the following table, show what happens to the firm\'s output c

Question

Using the data in the following table, show what happens to the firm's output choice and profit if the fixed cost of production increases from $100 to $120 to S170, where q is quantity and C is total cost. Assume that the price of output is $50. C (FC $170) $100) 100 150 178 198 212 C (FC = $120) 120 170 198 218 C (FC 170 248 282 28 14 18 250 272 310 342 425 545 292 375 45 410 475 10 9 units (enter your response using an integer) and profit will be $ If the fixed cost of production is $100, then output will be

Explanation / Answer

Answer
Fixed cost does not affect the output choice but it affects the profit
The output choice is MC=P
where
Q=11
at all the prices because the MC=P is not possible at given combination of MC and the MC<P then the firm can produce Q=11
Profit=TR-TC
TR=P*Q
Profit at P=100
=100*11-475
=625
Profit at P=120
=11*120-495
=825
Profit at P=170
=11*170-545
=1325

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