Suppose a Firm has fixed costs of $50. Using this information complete the table

Question

Suppose a Firm has fixed costs of $50. Using this information complete the table below....Suppose this good is sold in aperfectly competitive market and the price determined in that market is $30 per unity. How many units should this firm produce? calculate economic profit or loss. I've got the graph done. I don't know the second part though

31.667

Q FC VC TC MC AFC AVC ATC 0 50 0 50 - - - - 1 50 20 70 20 50.000 20.000 70.000 2 50 30 80 10 25.000 15.000 40.000 3 50 50 100 20 16.667 16.667 33.333 4 50 75 125 25 12.500 18.750 31.250 5 50 105 155 30 10.000 21.000 31.000 6 50 140 190 35 8.333 23.333

31.667

Explanation / Answer

The table has been already filled in.

In perfect competition, a firm maximizes profit by equating price with MC. So, when Price = $30, MC should be equal to $30.

MC = $30 when Q = 5 units.

When Q = 5 units, ATC = $31

Since ATC > Price, there is an economic loss.

Economic loss = Q x (ATC - P) = 5 x $(31 - 30) = 5 x $1 = $5

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