Suppose that a purely competitive firm has the production costs reported in the
ID: 1176503 • Letter: S
Question
Suppose that a purely competitive firm has the production costs reported in the table below. Fill out the rest of the table and answer the following questions regarding the output produced, profits, and losses in the short-run.
Output
TVC
TC
AFC
AVC
ATC
MC
0
0
100
-
-
-
-
1
100
2
180
3
240
4
320
5
440
6
600
7
800
8
1040
Suppose that the competitive market price is $165. How many units of output should the individual competitive firm produce to maximize profits (or minimize losses) in the short-run? Explain carefully the economic rationale behind this figure. In this first state of the world, the unit profit (or loss) equals ____, and the total profit (or loss) equals ____. Show the math.
Suppose that the competitive market price falls $90. How many units of output should the individual competitive firm produce to maximize profits (or minimize losses) in the short-run? Explain carefully the economic rationale behind this figure. In this second state of the world, the unit profit (or loss) equals ____, and the total profit (or loss) equals ____. Show the math.
Suppose that the competitive market price falls further to $75. How many units of output should the individual competitive firm produce to maximize profits (or minimize losses) in the short-run? Explain carefully the economic rationale behind this figure. In this third state of the world, the total profit (or loss) equals ____.
Output
TVC
TC
AFC
AVC
ATC
MC
0
0
100
-
-
-
-
1
100
2
180
3
240
4
320
5
440
6
600
7
800
8
1040
Explanation / Answer
Why did you change the loss from 2 to 4 in the second part?
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.