Question

Total Product	Average Fixed Cost	Average Variable Cost	Average Total Cost	Marginal Cost
1	$150.00	$25.00	$175.00	$ 25.00
2	75.00	23.00	98.00	21.00
3	50.00	20.00	70.00	14.00
4	37.50	21.00	58.50	24.00
5	30.00	23.00	53.00	31.00
6	25.00	25.00	50.00	35.00
7	21.43	28.00	49.43	46.01
8	18.75	33.00	51.76	68.07
9	16.67	39.00	55.67	86.95
10	15.00	48.00	63.00	128.97

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $35, it will produce

Multiple Choice

• 6 units at a loss of $150.

• 6 units at a loss of $90.

• 9 units at an economic profit of $281.97.

• 8 units at an economic profit of $130.72.

Answer 1

A perfectly competitive firm produces where P= MC. Thus it produces 6 units.

Loss=(ATC-P)Q = (50-35)6= 90

6 units at a loss of $ 90