a) Display in the table an appropriate formula to calculate a particular indicat
ID: 1109290 • Letter: A
Question
a) Display in the table an appropriate formula to calculate a particular indicator b) Fill in the table c) What is the price of one unit of product? d) What is the total fixed cost of5ta unit of output? e) Let us assume that a firm operates in a perfect competition market, which means that MR-P. What is the profit maximising level of output? What approaches we can apply in order to find the profit maximising output and the maximum profit? Explain the answer f) What is the maximum level of profit the firm can make in this market? Average fixed cost (AFC) Total Average Total cost (TC) Total reveriue (TR) Total Output, ixed cost units (Q) AverageMarginalMarginal cost variableariable total cost revernue Profit cost cost (TFC) (ATC) (MC) (MR) | (TVC) | (AVC) Formulas 0 100 270 380 460 2 3 4 5 6 7 150 150 150 150 150 150 150 450 660 140 990Explanation / Answer
c) Since MR is constant:
Price of one unit = 150
d) Total fixed cost = 100 (TFC = TC when Q = 0)
e) Profit would be maximized where MR > = MC for the last quantity produced.
MR = 150 and MC = 140 when Q = 6 (MR > MC)
Alternatively, we can observe the Profit column (=TR - TC) and directly read the value of Q where profit is maximum.
Q = 6 (Profit maximizing output)
f) Maximum level of profit = 100
Q TFC AFC TVC AVC TC ATC MC MR TR Profit Formulas TFC/Q TVC/Q TFC + TVC TC/Q TC (n units) - TC ((n-1) units) TR (n units) = TR ((n-1) units) + MR (nth unit) TR - TC 0 100 0 100 0 -100 1 100 100.00 170 170.00 270 270.00 170 150 150 -120 2 100 50.00 280 140.00 380 190.00 110 150 300 -80 3 100 33.33 360 120.00 460 153.33 80 150 450 -10 4 100 25.00 450 112.50 550 137.50 90 150 600 50 5 100 20.00 560 112.00 660 132.00 110 150 750 90 6 100 16.67 700 116.67 800 133.33 140 150 900 100 7 100 14.29 890 127.14 990 141.43 190 150 1050 60Related Questions
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