2. Complete the following schedule of data. Q TFC TVC TC AFC AVC ATC MC 7 $100 _
ID: 1185889 • Letter: 2
Question
2. Complete the following schedule of data.
Q TFC TVC TC AFC AVC ATC MC
7 $100 ______ $150 ______ ______ ______
8 ______ ______ 156 ______ ______ ______
9 ______ ______ 163 ______ ______ ______
10 ______ ______ 171 ______ ______ ______
11 ______ ______ 180 ______ ______ ______
12 ______ ______ 190 ______ ______ ______
13 ______ ______ 201 ______ ______ ______
14 ______ ______ 213 ______ ______ ______
15 ______ ______ 226 ______ ______ ______
16 ______ ______ 240 ______ ______ ______
17 ______ ______ 255 ______ ______ ______
18 ______ ______ 271 ______ ______ ______
19 ______ ______ 288 ______ ______ ______
20 ______ ______ 306 ______ ______ ______
For each of the following product prices, determine the two levels of output between which a perfectly competitive firm will produce in the short run so as to maximize profits or minimize losses. Also determine if the firm will be earning positive, zero, or negative economic profits by calculating the amount of profit or loss at either of these two levels of output. Will the firm want to continue operation?
a. P = $17
b. P = $15
c. P = $10
d. P = $ 6
Explanation / Answer
The profit maximizing rule for production is produce Q where MR=MC Because P=MR in in perfectly competitive firm (MR=D=AR=P or "Mr DARP") we can look at the price of 17 and know that Quantity 19 is optimal. Subsequently, Q at Price b, c and d is Q 17, 12, and 8 respectively.
8 100 56 156 12.50 7.00 19.50 6 Price d 9 100 63 163 11.11 7.00 18.11 7
10 100 71 171 10.00 7.10 17.10 8
11 100 80 180 9.09 7.27 16.36 9
12 100 90 190 8.33 7.50 15.83 10 Price c 13 100 101 201 7.69 7.77 15.46 11
14 100 113 213 7.14 8.07 15.21 12
15 100 126 226 6.67 8.40 15.07 13
16 100 140 240 6.25 8.75 15.00 14
17 100 155 255 5.88 9.12 15.00 15 Price b 18 100 171 271 5.56 9.50 15.06 16
19 100 188 288 5.26 9.89 15.16 17 Price a 20 100 206 306 5.00 10.30 15.30 18
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