Question

Please indicate the correct answer and why(how much profit does she make). Thank you

The table shows some of the costs of production for Lila's Firewood. The firewood market is a perfectly competitive Total Average Average Average product bundles per day) market. At a market price of $79.06 a bundle, Lila's produces >Answer to 1 decimal place. In the short run, Lila's maximizes its profit and makes an economic profit of S a day. fixed variable t Marginal cost cost cost cost (dollars per bundle) 47.00 32.00 7.5 bundles of firewood. 85.00 33.00 .24.99 23.01 28.00 36.02 52.96 ..79.06 2.50 40.00 82.50 Answer with a positive number In the long run, firms_ OA. neither enter nor exit O B. exit O c. enter 28.33 35.00 63.33 the firewood market. 21.25 32.00 53.25 17.00 31.20 14.17 32.00 46.17 48.20 12.14 35.00 47.14 10.63 40.50 51.13

Answer 1

Question 1

7.5 units,

Explanation

Profit-maximizing output for a perfectly competitive firm in the short run is P=MC. The firm will produce output at which P=MC. For a competitive firm, MR=P. At 7.5 units, MC=P.

Question 2.

Economic profit, since total revenue exceeds total cost.

Price per bundle is $79.06.

ATC is $51.13.

Economic profit = $79.06 - $51.13=$27.93.

In the long run, a competitive firm is in equilibrium when MR=MC=AC. It will produce that output where LMC=LAC. Because if P is more than AC, the firm is making an economic profit.

Question 3

Firms will enter the market as there are no barriers to entry in perfect competition.

If firms are making a loss, then firms will exit the industry.