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ECO Case 3 solved
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- The following table gives short-run and long-run total costs for various levels of output for a perfectly competitive firm:
Output (Q)SRTCAVCTR
0350
1400
2425
3465
4505
5560
6635
7730
Note: AVC is Average Variable Cost
TR is Total Revenue
SRTC is Short Run Total Cost
SRTC = FC + VC (Total Cost = Fixed Cost + Variable Costs)
Please see background material for additional formulas.
- Suppose the fixed cost (FC) of production is $350 and Price (P) is $55, complete the table above. (Cut and paste the table into a separate document).
- Suppose you are producing 2 units of output (Q = 2), if you want to produce one extra unit of output (Q = 3), what would be the marginal cost? (Show your work.)
- If the market price is given as $55, how much output will the perfectly competitive firm produce to maximize profits? (Show your work.)
- Calculate the profit or loss. (Show your work.)
- Should the firm always shut down in the short run when it experiences a loss? Explain.
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[Solved] ECO Case 3 solved
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- Submitted On 28 Sep, 2015 06:45:16
Answer posted by
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The following table gives short-run and long-run total costs for various levels of output for a perfectly competitive firm:
Output (Q) SRTC AVC TR
0 350
1 400
2 425
3 465
4 505
5 560
6 635
7 730
Note:...
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ECO Case 3 solved
The following table gives short-run and long-run total costs for various levels of output for a perfectly competitive firm:
Output (Q) SRTC AVC TR
0 350
1 400
2 425
3 465
4 505
5 ...
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