Question
In: Economics
The table above shows a perfectly competitive firm's widget production and cost schedule. Suppose that the prevailing market price is $6.
| Quantity (Q) | Total Cost (TC) | Average Total Cost (ATC) | Marginal Cost (MC) |
| 0 | $9 | -- | -- |
| 1 | $10 | ||
| 2 | $12 | ||
| 3 | $15 | ||
| 4 | $19 | ||
| 5 | $24 | ||
| 6 | $30 | ||
| 7 | $49 |
The table above shows a perfectly competitive firm's widget production and cost schedule. Suppose that the prevailing market price is $6.
(a) Fill in the blanks of the table above.
(b) Find the profit-maximizing quantity using the condition MR = MC.
(c) Calculate the maximum profit using the following formula: Profit =(P − ATC)×Q
Solutions
Expert Solution
(a) Fill in the blanks of the table above.
| Q | TC | ATC | MC |
| 0 | 9 | ||
| 1 | 10 | 10 | 1 |
| 2 | 12 | 6 | 2 |
| 3 | 15 | 5 | 3 |
| 4 | 19 | 4.75 | 4 |
| 5 | 24 | 4.8 | 5 |
| 6 | 30 | 5 | 6 |
| 7 | 49 | 7 | 19 |
ATC=TC/Q
MC= change in TC/change in Q
(b) Find the profit-maximizing quantity using the condition MR = MC.
6 units.
Explanation:
firm maximizes its profit where MR=MC. in perfect competition price=MR. so, at Quantity 6, MR equals MC.
(c) Calculate the maximum profit using the following formula: Profit =(P − ATC)×Q
firm maximizes its profit where MR=MC. here profit maximizing quantity is 6.
Profit =(P − ATC)×Q
=(6-5)*6
=6.
Rahul Sunny answered 2 years agoRelated Solutions
The widget industry is perfectly competitive, and the current market price of a widget is $60....
The widget industry is perfectly competitive, and the current
market price of a widget is $60. A typical firm in this industry
chooses to produce 200 widgets. The total fixed cost paid by each
firm is $2000.
(a) To produce a quantity of 200 widgets, the firm employs 300
workers, at a wage of $20. What is the firms average variable cost
(AVC) at a quantity of 200 widgets?
(b) Sketch a diagram showing the optimal decision of the firm....
12.The table below shows cost data for a firm operating in a perfectly competitive market: Price...
12.The table below shows cost data for a firm operating in a
perfectly competitive market:
Price ($ per unit)
Quantity (units)
Total cost ($)
50.00
0
10.00
50.00
1
20.00
50.00
2
27.50
50.00
3
77.50
50.00
4
147.50
50.00
5
250.00
What is the firm’s total revenue when four units are
produced?
$160
$50
$200
$40
14.If a perfectly competitive firm is earning positive profits,
then
its average total cost must be higher than the market price.
its total...
Assume a perfectly competitive firms cost structure is given by the table above, and that the market price in this industry is $58.
QuantityTotal Cost0100110221163154422853506532778681124Use the table above to answer the following question.Assume a perfectly competitive firms cost structure is given by
the table above, and that the market price in this industry is $58.
If the firm is profit maximizing, how much should they produce?
Topic 2: A Firm's Production Decision in a Perfectly Competitive Market
Topic 2: A Firm's Production Decision in a Perfectly
Competitive MarketRefer to the contents in Week 5, as well as your notes and
example.Parts 1 and 2Using Excel, create a cost table with the following:Up to 6 workers with output (Q)The number of workers (L)The total fixed cost (FC)The total variable cost (VC)The total cost (TC)The average fixed, variable, and total costs (AFC, AVC,
ATC)The marginal cost (MC)Then, determine two market prices: one in which the firm has
positive profit...
The table above shows the production and cost schedule for producing t-shirts. Each worker is paid...
The table above shows the production and cost schedule for
producing t-shirts. Each worker is paid $250 per day and the total
fixed cost of capital is $1000. T-shirts can be sold at a local
store for $15.
Workers
Quantity of Production
Fixed Cost
Variable Cost
Total Cost
Average Fixed Cost
Average Variable Cost
Average
Marginal Cost
Total Cost
0
0
1
20
2
60
3
140
4
200
5
240
6
260
7
268
8
272
Use this information...
Suppose there is a perfectly competitive market for curry puffs. The perfectly competitive equilibrium price in...
Suppose there is a perfectly competitive market for curry puffs.
The perfectly competitive equilibrium price in this market is RM5
per puff. The perfectly competitive equilibrium quantity is 5,000
curry puffs. (a) Using a diagram, illustrate the perfectly
competitive equilibrium in the market for curry puffs. Clearly
label the areas of consumer surplus, producer surplus, and social
surplus at this equilibrium. [3 marks]
(b) Suppose that the government introduces a price floor for
curry puffs at RM7 each.
Note: Use...
A perfectly competitive firm's marginal cost curve above the average variable cost curve is its: Select...
A perfectly competitive firm's marginal cost curve above the
average variable cost curve is its:
Select one:
a. total revenue curve.
b. short-run supply curve.
c. input demand curve.
d. marginal revenue curve.
Figure below shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, the firm's profit is
Figure below shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, the firm's profit is
The table above shows some of the costs for a perfectly competitive firm. The firm will produce 9 units of output if the price per unit is
QuantityTotal fixed cost, TFC(dollars)Total variable cost, TVC(dollars)050001500100250018035002204500300550039065005007500640850080095001000105001250The table above shows some of the
costs for a perfectly competitive firm. The firm will produce 9
units of output if the price per unit isA) $1750.B) $200.C) $300.D) $500.
The table below shows the total cost and marginal cost for Chrissy's Costumes, a perfectly competitive...
The table below shows the total cost and marginal cost for
Chrissy's Costumes, a perfectly competitive firm producing
different quantities of children's costumes. The market price of
costumes is $15.00.
Chrissy's Costs of
Production
Quantity (costumes)
Total Cost (dollars)
Marginal Cost (dollars)
100
$8.00
$7.50
200
7.50
6.50
300
7.00
7.00
400
9.00
12.00
500
12.00
15.00
600
15.00
17.00
Instructions: Enter your answers as a whole
number.
a. If the market price is $15.00 per costume, how many...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- From 1965 to present, feminism sought to critique mainstream American society in order to challenge proscribed...
- For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional...
- Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The...
- TOWS matrix of WOW MOMO
- Write an anecdotal lead with a person focus from the following information; include a nut graph....
- Step 1 Picture yourself as a Senior Product Manager in your favorite industry. This could be...
- Gauss Jordan elimination using python for a 2d list (3x3) without using any library. Thanks
ADVERTISEMENT