Assume that the cost data in the table is purely for competition. c) Answer the
ID: 1255360 • Letter: A
Question
Assume that the cost data in the table is purely for competition.
c) Answer the questions of 4a assuming product price is $32.( questions for 4a were: At a price of $56 will this firm produce in the short run? If it is preferable to produce what will be the profit maximizing or loss minimizing output? What economic profit or loss will the firm realize per unit of output?)
Total Product
Ave Fix Cost
Ave Variable Cost
Ave Total Cost
Marginal Cost
0
1
$60.00
$45.00
$105
$45
2
30
42.5
72.5
40
3
20
40
60
35
4
15
37.5
52.5
30
5
12
37
49
35
6
10
37.5
47.5
40
7
8.57
38.57
47.14
45
8
7.5
40.63
48.13
55
9
6.67
43.33
50
65
10
6
46.5
52.5
75
Total Product
Ave Fix Cost
Ave Variable Cost
Ave Total Cost
Marginal Cost
0
1
$60.00
$45.00
$105
$45
2
30
42.5
72.5
40
3
20
40
60
35
4
15
37.5
52.5
30
5
12
37
49
35
6
10
37.5
47.5
40
7
8.57
38.57
47.14
45
8
7.5
40.63
48.13
55
9
6.67
43.33
50
65
10
6
46.5
52.5
75
Explanation / Answer
No, because $32 is always less than AVC. If it did produce according to the MR = MC rule, its output would be 4
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