17) Is this firm in a perfectly competitive industry ? How do you know ? 18) On

Question

17) Is this firm in a perfectly competitive industry ? How do you know ?

18) On the diagram above, AVERAGE FIXED COST is the LOWEST at .what Quantity ?

19) On the diagram above, AVERAGE VARIABLE COST is HIGHEST at. what Quantity ?

20) If the market Price =$80, what is the profit maximizing output level for this firm ? 300

21)At the output level you answered for question (20), what will be the TOTAL PROFITS for this firm?

22) What will be the price in the LONG RUN for firms in this industry ?

23) What quantity will this firm produce in the LONG RUN?

24) This firm would make NEGATIVE profits if the market price was BELOW what ?(how many dollars ?)

25) What quantity is the MAXIMUM TECHNICAL EFFICIENCY output for this firm ?

Explanation / Answer

17. Yes. Because the demand curve is horizontal line.

18. 200 units

19. Either at 100 units or at 500 units

20. 300 units.Because at 300 units MR = MC.

21. $12,000 (i.e. 40 x 300)

22. $20

23. 200 units

24. $20

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