if the table represents the production and cost figures of a firm operating unde
ID: 1092374 • Letter: I
Question
if the table represents the production and cost figures of a firm operating under perfect competition and the market price is 142.86, what is the profit maximizing level of output? what is the profit of this firm at this level of output?
labor
labor
Q MP AP TFC TVC TC AFC AVC ATC MC Market price 0 0 2000 0 2000 142.86 3 10 10 3.33333 2000 1000 3000 200 100 300 1000 142.86 6 25 15 4.16667 2000 2000 4000 80 80 160 1000 142.86 9 45 20 5 2000 3000 5000 44.4444 66.6667 111.111 1000 142.86 12 63 18 5.25 2000 4000 6000 31.746 63.4921 95.2381 1000 142.86 15 70 7 4.66667 2000 5000 7000 28.5714 71.4286 100 1000 142.86Explanation / Answer
A perfectly competitive firm will try to maximise its profit by equatin MC with MP. here we can see that happening at somewhere a little above 63 units but less than 70 units. lets say 67
The MP here is the MP per unit times units produced
labor Q MP AP TFC TVC TC AFC AVC ATC MC Market price Profit=Revenue-Cost(Units produced * Market price -TC) MP total 0 0 2000 0 2000 142.86 3 10 10 3.33333 2000 1000 3000 200 100 300 1000 142.86 -1571.4 100 0 6 25 15 4.16667 2000 2000 4000 80 80 160 1000 142.86 -428.5 375 0 9 45 20 5 2000 3000 5000 44.4444 66.6667 111.111 1000 142.86 1428.7 900 0 12 63 18 5.25 2000 4000 6000 31.746 63.4921 95.2381 1000 142.86 3000.18 1134 0 15 70 7 4.66667 2000 5000 7000 28.5714 71.4286 100 1000 142.86 3000.2 490Related Questions
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