A perfectly competitive firm faces the short-run cost schedule shown in Table 1. 3 4 Output Total Cost 2 5 6 7 8 12 20 26 32 40 52 68 93 122 Table 1 A) Calculate average total cost (ATC=TC/Q), marginal cost (MC=ATC/AQ) and marginal revenue (MR=ATR/AQ) for each level of output. The price per unit of output is £16. B) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At what output is profit maximised? C) How much profitloss is made at the optimum level of output? D) Assume market price declines to £9 per unit. If the firm's average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. E) If the firm is typical of other firms, what price will it charge in the long run? Explain.

A perfectly competitive firm faces the short-run cost schedule shown in Table 1. 3 4 Output Total Cost 2 5 6 7 8 12 20 26 32 40 52 68 93 122 Table 1 A) Calculate average total cost (ATC=TC/Q), marginal cost (MC=ATC/AQ) and marginal revenue (MR=ATR/AQ) for each level of output. The price per unit of output is £16. B) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At what output is profit maximised? C) How much profitloss is made at the optimum level of output? D) Assume market price declines to £9 per unit. If the firm's average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. E) If the firm is typical of other firms, what price will it charge in the long run? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

What does the ban on smoking in the resturant do?
This ended up being wrong. Can you please re-do? Thanks
set of guidelines for writing effective e-mails
What is the relevance of a website for a business ? Discuss it with various departmental factors.
KYC Policy Know your Customer What is the registration process to be tether customer?
What are the ethical issues that could be encountered when running an e-commerce platform?
What do Administrative costs include?
Write a short description about Jeff Bezos and about his achievements.
What is photo sharing?
Why junk food is a demerit goods
What are some of the difficulties and issues that consumers have while using a system that is not integrated?