In: Economics
PLEASE ANSWER ALL PARTS! THANK YOU
5*10 = 50) Please answer true or false and briefly
explain, or fill in the blank
MC = $______. Show computations.
f. State True or False and briefly explain: The ATC Curve achieves its minimum at an output lower than the output at minimum average variable cost curve.
g.. State True or False and briefly explain: A firm in a perfectly competitive market is a price taker
j. . State True or False and briefly explain: A competitive firm wishing to maximize short run profit will choose that output where MR = MC on the rising segment of the MC curve.
a) TVC = AVC*Q = 10*15 = $150
TC= TVC+TFC = 150+ 100 = $250
thus ATC at this level of production = 250/15 = $16.67
b) at L=3 and APL=90
thus TPL at L=3 is (90*3) = 270
since MPL = change in output / change in labor
= (270-125)/(3-2) = 145
c) at Q=4, TVC= AVC*Q = 25*4 = $100
and TC at Q=4 is TVC+TFC = 100+20 = $120
MC= change in total cost / change in quantity
= (120-110) / (4-3)
= $10
d) since w= $20 and MPL =30 units
MC= w/ MPL = 20/30 = .67
f) False ( ATC is at its minimum when MC=ATC)
g) True ( there are many buyers and many sellers in a perfectly
competitive market thus they charge price equal to market price
i.e., P=MR=MC and since price is fixed in this type of market as
they are price taker)
h) True (since price is fixed in this type of market as they are
price taker thus, P=MR=AR)
i) False (ATC depends on the level of MC i.e., if MC<ATC then
ATC is falling whereas if MC>ATC then ATC is rising )