1. The following table shows some data from a small business in a purely competitive market. If the market price is $120, what is the proft-maximizing quantity for this firm to choose? How much profit is the firm making at that quantity! Production Cost Data. Quanitcy Total Cost Total Fixed Cost Total Variable Cost Average Fixed Average Variable Average Total Marginal Cost Cost Cost Cost 0 $400 $400 $ $ $ $ 1 520 400 120 400 120 520 120 2 600 400 200 200 100 300 80 3 720 400 320 133.33 106.67 240 120 4 920 400 520 100 130 230 200 2. What price do you expect to see in the long run? What will happen in this market to get to that price?
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To find the profit-maximizing quantity, we need to determine the quantity at which marginal cost equals marginal revenue. In a purely competitive market, the firm's marginal revenue is equal to the market price. So, we need to find the quantity at which marginal Show more…
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The following table shows cost data for a perfectly competitive firm: Output Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 1 $300 $100 $400 $100 2 150 75 225 50 3 100 70 170 60 4 75 73 148 82 5 60 80 140 108 6 50 90 140 140 7 43 103 146 182 8 38 119 157 234 9 33 138 171 283 10 30 160 190 361 If the product price is $283, the per-unit economic profit at the profit-maximizing output is: Multiple Choice $0 $76 $112 $152
Andrew D.
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You are operating a firm in a perfectly competitive market. In the short run, you have fixed costs of $30. Your variable costs are given in the following table: Q | TVC 0 | 0 1 | 100 2 | 150 3 | 180 4 | 220 5 | 300 6 | 390 Complete the following table: Market Price | Profit maximizing level of output | Profit $48 | $60 | $75 | $85 |
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