A firm has short-run costs such that the lowest average variable cost it has for any quantity supplied greater than zero (i.e. for Qs > 0) is $10 a unit. The lowest average total cost (in the short-run) for any quantity supplied is $14 a unit. That is, $10 and $14 describe the height of the AVC curve and ATC curve at their respective minimums. Suppose the firm is in a perfectly competitive market. a. What is the marginal revenue of a unit at the market price of P? b. What is the average revenue at the market price of P?
A firm has short-run costs such that the lowest average variable cost it has for any quantity supplied greater than zero (i.e. for Qs > 0) is $10 a unit. The lowest average total cost (in the short-run) for any quantity supplied is $14 a unit. That is, $10 and $14 describe the height of the AVC curve and ATC curve at their respective minimums. Suppose the firm is in a perfectly competitive market. a. What is the marginal revenue of a unit at the market price of P? b. What is the average revenue at the market price of P?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section12.3: The Various Measures Of Cost
Problem 3QQ
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![A firm has short-run costs such that the lowest average variable cost it has for any
quantity supplied greater than zero (i.e. for Qs > 0 ) is $10 a unit. The lowest
average total cost (in the short-run) for any quantity supplied is $14 a unit. That is,
$10 and $14 describe the height of the AVC curve and ATC curve at their respective
minimums. Suppose the firm is in a perfectly competitive market.
a. What is the marginal revenue of a unit at the market price of P?
b. What is the average revenue at the market price of P?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F039207b8-632a-4dc4-a3c4-fd77b3c684b4%2F90974041-9d10-450d-b1bf-dbac75c35eb3%2Fbhg401q_processed.png&w=3840&q=75)
Transcribed Image Text:A firm has short-run costs such that the lowest average variable cost it has for any
quantity supplied greater than zero (i.e. for Qs > 0 ) is $10 a unit. The lowest
average total cost (in the short-run) for any quantity supplied is $14 a unit. That is,
$10 and $14 describe the height of the AVC curve and ATC curve at their respective
minimums. Suppose the firm is in a perfectly competitive market.
a. What is the marginal revenue of a unit at the market price of P?
b. What is the average revenue at the market price of P?
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A competitive firm optimizes its output at the point where marginal revenue is equal to the marginal cost .
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