Consider the table below which shows information on two different competitive
firms operating in two different markets.
FIRM A C
PRICE $0.50 $3.50
OUTPUT 1,000 750
TOTAL REVENUE $500 $2,625
TOTAL COSTS $400 $2,625
TOTAL FIXED COSTS $100 $375
TOTAL VARIABLE COSTS $300 $2,250
AVERAGE TOTAL COSTS $0.40 $3.50
AVERAGE VARIABLE COSTS $0.30 $3.00
MARGINAL COST $0.40 $3.50
Which (if either) of these two firms is producing at its lowest ATC?
a) Both firms are because their MC = ATC.
b) Firm C because its revenues equal its total costs.
c) Firm A because it is making profits.
d) Neither firm since they do not produce the same amounts.
e) It is impossible to tell from the information given.
