9. A firm sells rice in a perfectly competitive market. If the equilibrium price
ID: 1136354 • Letter: 9
Question
9.
A firm sells rice in a perfectly competitive market. If the equilibrium price is $3 per bushel, how much rice will the firm sell? Answer the question using the table below.
Quantity
Marginal Cost
1000
2
1200
3
1400
4
1500
5
1600
6
Select one:
a. 1000
b. 1200
c. 1400
d. 1600
10. A firm sells wheat in a perfectly competitive market. Below is a table of the total costs associated with different levels of quantity. If price is $30, how much will it produce?
Quantity
Total Cost
100
$ 200.00
120
$ 300.00
140
$ 500.00
150
$ 800.00
160
$ 1,200.00
Select one:
a. 120
b. 140
c. 150
d. 160
Quantity
Marginal Cost
1000
2
1200
3
1400
4
1500
5
1600
6
Explanation / Answer
Q9
Answer
Option b
In perfectly competitive market firms produces at MC=P
so the Quantity is 1200 at P=MC=$3
---------
Q10
It depends on the Marginal cost
MC of n-th unit=(TC of n units -TC of p unit)/(n-p) ............. where n>p
MC(120)=(300-200)/(120-100)
=5
and so on
MC(140)=10
MC(150)=30
MC(160)=40
The MC=P at Q=150 so the firm will produce 150 units
Option c
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