Suppose you are the owner of a firm producing bicycles at the average cost per bicycle...

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Question

Suppose you are the owner of a firm producing bicycles at the average cost per bicycle in the table below. Initially, you pro

Answer 1

Answer #1

Total cost for 200 bicycles=200*200=40000

Total cost for 201 bicycles=201*201=40401

marginal cost for 201 bicycle=401 whereas marginal revenue for 201 bicycle is 350.

since marginal cost > marginal revenue for 201 bicycle. Thus it has marginal loss and it should not be produced in order to maximise profit

Answer 2

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