2) For the table you completed for question 3 on homework 5(see below table), wh

Question

2) For the table you completed for question 3 on homework 5(see below table), what is the firm’s most profitable output level in a competitive industry—and what is the resulting profit—if price is: a.) $35 per unit b.) $55 per unit c.) $75 per unit

If the variable costs in the table for the preceding question are inflated by 50%, will the firm’s profit-maximizing output level change? Illustrate your answer with a rough graph of 2c. $75 per unit (revised).

Q FC VC TV MC AFC AVC ATC 1 100 50 150 50 0 0 0 2 100 80 100 30 50 40 90 3 100 120 220 40 33.33 40 73.33 4 100 170 270 50 25 42.5 67.5 5 100 250 350 80 20 50 70

Explanation / Answer

please correct the table aslo first --- at q=2. TC = 180 and at quantity 1 = MC is NA

2) For a competitive industry - firm maximize its profit where MR=MC

and we know that P=MR.

the firm most profitable output level is 5 units.

when price is A) $35 .

profit = TR -TC

profit = ( 35 *5) - 350 = -175

b) when price is $55

profit = 275-350 = - 75

when price is $75

profit =375 -350 = 250

Yes, the firm's profit-maximizng output level change because when the variable cost in inflated by 50% , then firm marginal cost also increased due to which firm output maximization will change.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.