A perfectly competitive firm has the following short-run total cost: Quantity TC MC AVC ATC $5 10 2 13 18 25 5 34 6 45 The market demand for the firm's product is given by the following market demand schedule: Price Quantity Demanded $12 300 10 500 8 800 6 1200 4 1800 Calculate the firm's marginal cost, and for all output levels except zero, the firm's average variable cost and average total cost. а. b. There are one hundred firms in the industry that all have identical costs. What is the market price, and how much profit will each firm make? Hint: You have to find the price at which quantity demanded equals quantity supplied for the entire market. c. How many firms will be in this industry in the long run if the above costs correspond to the most efficient amount of capital for a firm?
A perfectly competitive firm has the following short-run total cost: Quantity TC MC AVC ATC $5 10 2 13 18 25 5 34 6 45 The market demand for the firm's product is given by the following market demand schedule: Price Quantity Demanded $12 300 10 500 8 800 6 1200 4 1800 Calculate the firm's marginal cost, and for all output levels except zero, the firm's average variable cost and average total cost. а. b. There are one hundred firms in the industry that all have identical costs. What is the market price, and how much profit will each firm make? Hint: You have to find the price at which quantity demanded equals quantity supplied for the entire market. c. How many firms will be in this industry in the long run if the above costs correspond to the most efficient amount of capital for a firm?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A perfectly competitive firm has the following short-run total cost:
MC
Quantity
TC
AVC
ATC
$5
1
10
2
13
3
18
4
25
34
45
The market demand for the firm's product is given by the following market demand schedule:
Price
Quantity Demanded
$12
300
10
500
8
800
6.
1200
4
1800
Calculate the firm's marginal cost, and for all output levels except zero, the firm's average variable cost and average total cost.
а.
b.
There are one hundred firms in the industry that all have identical costs. What is the market price, and how much profit will each firm make? Hint: You have to find
the price at which quantity demanded equals quantity supplied for the entire market.
c. How many firms will be in this industry in the long run if the above costs correspond to the most efficient amount of capital for a firm?
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