a. Complete the table. b. A competitive firm maximizes profit when the market pr
ID: 1166373 • Letter: A
Question
a. Complete the table.
b. A competitive firm maximizes profit when the market price equals the marginal cost. If the market price was $90, how much output would the firm produce? What would be the firm’s economic profit?
c. What would the firm do if the market price falls to $50?
2.
Output
TC
10
60
20
100
30
130
40
150
50
180
60
220
70
270
80
330
90
400
100
500
a. Calculate Marginal Cost and Average Total Cost.
b. A competitive firm maximizes profit when the market price equals the marginal cost. If the market price was $6, how much output would the firm produce? What would be the firm’s economic profit?
output fc vc tc mc atc avc 0 100 0 1 130 2 70 3 220 4 60 5 70 6 56.66 7 100Explanation / Answer
B) Given profitis maximized at the point where P = MC = 90, equilibrium output = 6 units
Economic profit at Q = 6 is: (90)(6) - 440 = 100
c) at P = 50, Q = 3 and economic profit = 150 - 220 = loss of $70
Ques 2.
B) Given, P = MC = 6, equilibrium output = 80 units and economic profit = (80)(6) - 330 = 150
Q FC VC TC MC ATC AVC 0 100 0 100 - - - 1 100 30 130 30 130 30 2 100 70 170 40 85 35 3 100 120 220 50 73.33 40 4 100 180 280 60 70 45 5 100 250 350 70 70 50 6 100 340 440 90 73.33 56.66 7 100 440 540 100 77.14 62.85Related Questions
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