Question

In: Economics

Complete the table below and answer the following questions. The price for this perfectly competitive firm...

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

Expert Solution

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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Rahul Sunny answered 3 months ago

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