Suppose a firm has the following costs: Output (units): 10 11 12 13 14 15 16 17
ID: 1177314 • Letter: S
Question
Suppose a firm has the following costs:
Output (units):
10
11
12
13
14
15
16
17
18
19
Total Cost:
$50
$52
$56
$62
$70
$80
$92
$106
$122
$140
(a) If the prevailing market price is $16 per unit, how much should the firm produce?
(b) How much profit will it earn at that output rate?
(c) If the market price dropped to $12, what should the firm do?
(d) How much profit will it make at that lower price?
Output (units):
10
11
12
13
14
15
16
17
18
19
Total Cost:
$50
$52
$56
$62
$70
$80
$92
$106
$122
$140
Explanation / Answer
a.18 units
b.$9/unit
c.Its better to decrease production to 16units
since the price had dropped
d.profit made at low price
= 6$/unit
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