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Assume a single firm in a purely competitive industry has the following costs:

Assume a single firm in a purely competitive industry has the following costs:

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 4MC
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8. Assume a single firm in a purely competitive industry has the following costs: (1) Total Product 0 1 2 3 4 5 879 6 (2) (3) (4) (5) (6) TVC TC AFC AVC ATC PO P 40 55 75 90 110 135 170 220 290 (7) MC 95 P40.00 P55.00 P95.00 P55.00 115 20.00 37.50 57.50 20.00 130 13.33 30.00 43.33 15.00 150 10.00 27.50 37.50 20.00 175 8.00 27.00 35.00 25.00 210 6.67 28.33 35.00 35.00 260 5.71 31.43 37.14 50.00 330 5.00 36.25 41.25 70.00 8a) At a product price of P52, will this firm produce in the short run? Explain. What will its profit or loss be? 8b) At a product price of P28, will this firm produce in the short run? Explain. What will its profit or loss be? 8c) At a product price of P22, will this firm produce in the short run? Explain. What will its profit or loss be?
Transcribed Image Text:8. Assume a single firm in a purely competitive industry has the following costs: (1) Total Product 0 1 2 3 4 5 879 6 (2) (3) (4) (5) (6) TVC TC AFC AVC ATC PO P 40 55 75 90 110 135 170 220 290 (7) MC 95 P40.00 P55.00 P95.00 P55.00 115 20.00 37.50 57.50 20.00 130 13.33 30.00 43.33 15.00 150 10.00 27.50 37.50 20.00 175 8.00 27.00 35.00 25.00 210 6.67 28.33 35.00 35.00 260 5.71 31.43 37.14 50.00 330 5.00 36.25 41.25 70.00 8a) At a product price of P52, will this firm produce in the short run? Explain. What will its profit or loss be? 8b) At a product price of P28, will this firm produce in the short run? Explain. What will its profit or loss be? 8c) At a product price of P22, will this firm produce in the short run? Explain. What will its profit or loss be?
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