Question

In: Economics

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

Quantity

Total fixed cost, TFC

(dollars)

Total variable cost, TVC

(dollars)

0

500

0

1

500

100

2

500

180

3

500

220

4

500

300

5

500

390

6

500

500

7

500

640

8

500

800

9

500

1000

10

500

1250

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

A) $1750.

B) $200.

C) $300.

D) $500.

Solutions

Expert Solution

the costs for a perfectly competitive firm produces at MC=P
MC of n the unit=(VC of n units -VC of p units )/(n-p)...............n>p
MC(9)=(1000-800)/(9-8)
=200 units
the price should be equal to $200
option B

Rahul Sunny answered 3 years ago
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