the following table shows marginal and average total cost schedules for a perfec
ID: 1099607 • Letter: T
Question
the following table shows marginal and average total cost schedules for a perfectly competitive firm. currently, the market price in this industry is $8.
Output(units) Marginal Cost Average Total Cost
(Q) (MC) (ATC)
0 - -
1 2 12
2 4 8
3 6 5
4 8 8
5 10 8
A profit-maximizing firm will produce ____ units (enter your response as as integer)
The firm's short-run profit at this level of output is $_____ (round yours response to the nearest penny)
Explanation / Answer
A profit-maximizing firm will produce 4 units (enter your response as as integer)
The firm's short-run profit at this level of output is $0.00
In a competitive market, a firm will produce up to the point that its marginal cost equals is marginal benefit, which is the market price, so it will produce until its marginal cost is $8, which occurs at Q=4. At this level, the table indicates an average total cost also of $8, so the firm will run precisely zero profits.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.