Question

Please explain

The average total cost curve for a perfectly competitive firm Suppose the marginal cost curves upward sloping and the femismazing is total profitta market price of $15. The firm's per un profit • 10 20 30 40 50 60 70 80 Multiple Choice positive amountless than 55 pouve amount more than 200

Answer 1

The perfectly competitive firm produces where the marginal cost equals the marginal revenue , it should be noted that the demand in the perfectly elastic so the market price will be equal to the marginal revenue and the average revenue. So here the marginal revenue is $15.

The marginal cost is the addition made to the total cost when an additional unit of the commodity is produced. The nature of the marginal cost is follows, the marginal cost would initially fall and keep rising and it is very important that the marginal cost cuts the average cost at its minimum point from below. If we look at the ATC curve , the minimum point is about 40 units and $10 price of the commodity. It is clear that the firm is producing over 40 units of the commodity , after MC cuts the ATC the marginal cost still going to rise (don't forget the firm produces where the marginal cost equals the marginal revenue ). The marginal cost should rise more to equal the marginal revenue that is $15.

Ans: A positive amount less than 5.