In: Economics
Complete the table below and answer the following questions. The price for this perfectly competitive firm is $150. A) Should this firm produce? B) If so, how many units should it produce? C) What is the economic profit or economic loss?
QTY | FC | VC | TC | AFC | AVC | ATC | MC | MR |
0 | 500 | |||||||
1 | 650 | |||||||
2 | 700 | |||||||
3 | 760 | |||||||
4 | 840 | |||||||
5 | 950 | |||||||
6 | 1090 | |||||||
7 | 1270 | |||||||
8 | 1500 | |||||||
9 | 1790 | |||||||
10 | 2150 |
We can determine the various cost using the following formula
TC = FC + VC
As we know that when Q = 0, TC = FC
Therefore, here FC = 500
VC = TC - FC
AFC = FC /Q
AVC = VC /Q
ATC = TC/Q = AFC + AVC
Marginal cost is defined as change in total cost over change in Quantity.
In case of perfect competition MR = P
Refer the attached picture for the table
A. Yes the form should produce .
B. The firm should produce 6 units of output.
C. Profit = Total Revenue - Total cost
= 150 × 6 - 1,090
= 900 - 1,090
= - $ 190
So, the firm makes a loss of $ 190.
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