Question

The table below represents the output and cost structure for a firm. The market is perfectly competitive, and the market price is $10. Total costs include all implicit opportunity costs. Total Cost Marginal Marginal Cost Revenue Total Revenue 0 Average Total Cost Average Variable Cost Output 0 Profit 3 XXX XXX 1 2 7 9 10 10 20 30 3 4 12 40 5 16 50 6 22 60 7 30 70 8 40 80 90 9 52 10 68 100 1. Calculate the firm's profit at each rate of output and fill in the values in the table. 2. Calculate firm's marginal cost and marginal revenue at each rate of output and fill in the values in the table. 3. Calculate the firm's average total costs and average variable costs at each rate of output and fill in the values in the table. 4. Based on the information in the table above, plot marginal cost (MC) at each rate of output. Properly label this line. 5. Based on the information in the table above, plot marginal revenue (MR) at each rate of output. Properly label each line. 6. Based on the information in the table above, plot average total costs (ATC) and average variable costs at each rate of output. Properly label each line. 7. Highlight in yellow the short-run supply curve for this perfectly competitive firm. 8. Based on marginal analysis, what is the profit-maximizing rate of output for the firm?

Answer 1

Profit Output unable za) Cost MR dit) -d(TE) 1-0 = 10 54.519-3) 2 2-) 2 do I ALER I ve 110 116 Total Total Magial Magical Arnage | Armage cost reveme cost | Revene totul (TC) (TR) TCTR-TC) MC cost ta (0-3) 0 3 o =-3 7 (10-7) (7-3) (10-0) 10 7 1 (1-3) =3 1-0 :7 = 4 4 2 9 120-9) (9-7) (20-10 9 20 = 11 (2-1) - 2 = 10 = 3 3 10 30 (30-10) (10-3 10 10-3.33 (10-3) = 20 32.33 12 40 174-3) 10 1-3 (2-3) E28 (6-3) 5 16 50 (50-16) 4 34 5 2.6 (22-3 6 22 60 10. 30 1170-30) 18 (30-3) 30 7 70 - 40 10 7=3.86] 40-3 9 40 = 40 97.4 To 90 52 9 38 1000-68) 16 10 h = 6 168 10 68 = 32 3 4 |(40-122 12-10) 4 - 2 = 2.25 -3.2 160-22 6 22 6 3167 1= 38 = 3.17 3-4.29 180-40) 10 10 4 25 80 152 190-52) 12 1935.7862-3) 9 = 5:44 D --6.8168-3 102615 Tis part is shown in the table. 22 This part is shown in the table. This part is shown on the table. The ato output, total cost = 3. the fined cost FC= 3. variable cost (VC) = (TC='FC)=(T2-3) Arnage variable cost, Avca v 3) (TC-3) CS Scanned with CamScanner

8 potit manimising conditôn here is s EMC Aprice 16 )2 MR 11 10. ATC Ave 8 it 5 I در) 2 4 2 3 4 5 6 7 8 9 10 ho 2 Now we can plot the marrial revue cave , MR } 6 Now we can plot ATC and A vi cury 2 the supply cure is shown the shaded aula of Me Me care se from output leads where MC JAVO P=MR=MC thes P = MR = MC = 10 the MR = MC=10 at 81 wits of output thee; protit marimisig rate of output for trim is quits CS Scanned with CamScanner