Question

suppose a competitive firm has the following cost:

Q 0 1 2 3 4 5 6 7 8 9

TC ($) 50 54 62 74 90 110 134 162 194 230

(Q: output ; TC: total cost)

1 Assume market price is $12 how much should the firm produce to maximize profit?

2 How much profit will it earn at $12?

3 Assume market price is $28, how much should the firm produce to maximize profit?

4 How much profit will it earn at $28?

5 From #1 #4 we can conclude: as price increases, firm produces (less, more) and profit (decreases, increases) circle the correct ones.

PART 2

This cost table is related to a competitive firm.

Q. TFC TVC TC AVC ATC MC

0 30 NA NA NA

1 50

2 66

3 80

4 90

5 100

6 114

7 131.2

8 150

9 190

Using this table above, answer the following questions.

6 Complete the table above.

7 Plot ATC, AVC, and MC in one diagram.

8 What is the shutdown price?

9 At a price of $18.8 how much should the firm produce to maximize profit?

10 At a price of $18.8 calculate its profit.

please show mw how you got the result not only the answer. thank you

Answer 1

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