In: Economics
A dairy farm faces a perfectly competitive market. It sells milk at $6 per liter. Complete the table below to answer the following questions.
Quantity of output (liter) |
Total revenue |
Marginal revenue |
Total cost |
Marginal cost |
ATC |
VC |
AVC |
0 |
3 |
||||||
1 |
5 |
||||||
2 |
8 |
||||||
3 |
12 |
||||||
4 |
17 |
||||||
5 |
23 |
||||||
6 |
30 |
||||||
7 |
38 |
||||||
8 |
47 |
a) Find the quantity of output that maximizes the profit for the firm. Also calculate the profit at that level.
b) Find out the break-even quantity for the firm.
c) Find out the shutdown point for the firm.