Question

A competitive firm has total costs of production as indicated in the table below. Make calculation to fill in the following blanks.

Quantity	Total Cost
0	$100
1	$140
2	$170
3	$190
4	$200
5	$230
6	$280
7	$340

The fixed cost is $ .

b) If the market price is $60, the optimal output is Q = , the profit is $ , and the total variable cost = $ .

c) If the market price is $30, the optimal output is Q = , the profit is $ , and the rent =$ .

d) If the market price is $20, the optimal output is Q = , the profit is $ , and the rent =$ .

Answer 1

Q	TC	FC	VC	MC	AVC
0	100	100	0
1	140	100	40	40	40
2	170	100	70	30	35
3	190	100	90	20	30
4	200	100	100	10	25
5	230	100	130	30	26
6	280	100	180	50	30
7	340	100	240	60	34.28

a) Fixed cost = 100

b) P=60

Q = 7 units

Profit = (60*7)-340 = 120

TVC = 240

c) P=30

Q = 5 units

Profit = (30*5)-230 = -80

TVC = 130

d) P=20

Q = 0 units

Profit = -100

TVC = 0