This table shows the demand schedule, marginal cost, and average total cost for
ID: 1119440 • Letter: T
Question
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
Quantity
Price
Marginal Cost
Average Total Cost
0
$10
--
--
1
$9
$3
$14
2
$8
$6
$10
3
$7
$9
$9
4
$6
$12
$10
5
$5
$15
$12
6
$4
$18
$14
7
$3
$21
$17
8
$2
$24
$21
9
$1
$27
$25
10
$0
$30
$29
Refer to Table 16-4. What is this firm’s profit maximizing level of output?
Select one:
a. 0 units of output
b. 1 unit of output
c. 2 units of output
d. 3 units of output
Quantity
Price
Marginal Cost
Average Total Cost
0
$10
--
--
1
$9
$3
$14
2
$8
$6
$10
3
$7
$9
$9
4
$6
$12
$10
5
$5
$15
$12
6
$4
$18
$14
7
$3
$21
$17
8
$2
$24
$21
9
$1
$27
$25
10
$0
$30
$29
Explanation / Answer
Answer
TR=P*Q
MR of n th unit=(TR of n units -TR of p units)/(n-p)...................n>p
profit=TR-TC
The firm produces at MR=MC or the closet lower MC
where
Q=2 and P=$8
option c
Quantity Price TR MR 0 10 0 1 9 9 9 2 8 16 7 3 7 21 5 4 6 24 3 5 5 25 1 6 4 24 -1 7 3 21 -3 8 2 16 -5 9 1 9 -7 10 0 0 -9Related Questions
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