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You are glven the following cost data: Total fixed costs are $15. TVC 20 40 70 110 170 250 If the price of output is S30, how

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Answer #1
q TVC MC = Change in TVC
0 0 -
1 20 20-0 = 20
2 40 40-20 = 20
3 70 70-40 = 30
4 110 110-70 = 40
5 170 170-110 = 60
6 250 250-170 = 80

Marginal cost, MC = Change in Total cost/Change in q = Change in TVC/Change in q = Change in TVC (As change in q = 1 here)

A competitive firm produces that much output where Price = MC

The firm will produce 3 units of output because this is where price equals marginal cost.

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