Question

Use the following to answer questions 36-37 Answer the next question(s) on the basis of the following cost data for a firm which is selling in a purely competitive market Average fixed Average variable Average Total product total Marginal cost $100.00 cost cost cost 1 $17.00 $117.00 66.00 $17 15 13 12 13 14 26 30 35 41 50.00 33.33 25.00 20.00 16.67 16.00 15.00 14.25 14.00 14.00 15.71 48.33 39.25 34.00 5 6 30.67 30.00 7 14.29 12.50 11.11 10.00 17.50 30.00 19.44 21.60 30.55 31.60 33.09 10 48 11 9.09 24.00 26.67 56 12 8.33 35.00 36. Refer to the above data. If the market price for the firm's product is $12, the competitive firm will produce: A) 4 units at a loss of $109. B) 4 units at an economic profit of $31.75. D) zero units at a loss of $100. D 8 units at a loss of $48.80. C) 37. Refer to the above data. If the market price for the firm's product is $32, the competitive firm will: A) produce 8 units at an economic profit of $16. B) produce 5 units at a loss of $10. C) produce 8 units at a loss equal to the firm's total fixed cost. D produce 7 units at an economic profit of $41.50. 38. Competitive firm short-run supply is: A) Its AVC curve. B) Its MC starting from the minimum of AVC C) Its MC starting from the minimum of ATC. D) Its ATC curve. 10

Answer 1

36.A perfectly competitive firm is in equilibrium when P=MC.When P=MC=12, the firm produces 4units.

P<AC so the firm is making loss

Answer-A

37.Answer-A

P>AC so the firm will earn profits.

38.Supply curve is MC after it cuts AVC at its minimum.

Answer-B