Q |
TC |
0 |
$100 |
1 |
110 |
2 |
130 |
3 |
160 |
4 |
200 |
5 |
250 |
6 |
310 |
7 |
380 |
8 |
460 |
9 |
550 |
10 |
650 |
MC = Change in TC / Change in Q
Output | TC | MC |
0 | 100 | |
1 | 110 | 10 |
2 | 130 | 20 |
3 | 160 | 30 |
4 | 200 | 40 |
5 | 250 | 50 |
6 | 310 | 60 |
7 | 380 | 70 |
8 | 460 | 80 |
9 | 550 | 90 |
10 | 650 | 100 |
a. In perfect competition profit is maximized when P = MC
Here P = MC = 80 at output level of 8
b. Profit / Loss = TR - TC = 8 * 80 - 460 = 640 - 460 = 180
As Firm is earning positive profit, firms will enter the market
c. In a monopoly, profit is maximized where MR = MC
Here MR = MC = 50 at output level of 5
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