Fill in the following table for a firm in a perfectly competitive industry.QuantityPriceTRTCProfitATCMRMC5$100$500$300 6$100 $330 $100$30 7$100 $420 8$100 $520 9$100 $630 What is the highest profit possible? What is the profit maximizing price? What is the profit maximizing level of output? (Pick one if there are multiple levels of output with the same profit.) What is the average total cost at profit maximization? (Use the same Q you used in c.) What is the profit per unit at profit maximization? How you do know that this is a table for a perfectly competitive firm? In the table above, if you only had the columns Quantity, MR, and MC, explain how you still be able to find the profit-maximizing level of output.

Perfect competition is a type of market structure in which there are large number of buyers and sellers for a homogeneous commodity. A perfectly competitive firm is a price taker and can sell any quantity of the commodity at a market-determined price.Total Revenue (TR) = Quantity * PriceProfit = TR - TCAverage Total Cost (ATC) = TC / QuantityMarginal Revenue (MR) = Change in TR / Change in QMarginal Cost (MC) = Change in TC / Change in QUsing these formulas we can complete the given table as follows:QuantityPriceTRTCProfitATCMRMC5$100$500$300$200$60--6$100$600$330$270$55$100$307$100$700$420$280$60$100$908$100$800$520$280$65$100$1009$100$900$630$270$70$100$110The highest profit for the perfect competitive firm is $280.The price corresponding to the maximum profit is $100.Profit is maximum for the output levels 7 units and 8 units. But MR = MC (profit maximization condition) when the output level is 8 units. Hence the profit maximization level of output is 8 units.ATC at profit maximization is $65.Profit per unit at profit maximization is $280/8 = $35.A perfectly competitive firm is a price taker and has constant price at all levels of output. Since price is constant P= MR. From the above table, P=MR=$100 for all quantities of output. Hence the table belongs to a perfectly competitive firm.The profit maximizing level of output for a perfectly competitive firm is given at the point where marginal revenue (MR) equals marginal cost (MC) and MC is rising. Hence if you only had the columns Quantity, MR, and MC, we could still find the profit-maximizing level of output.Table with solution:QuantityPriceTRTCProfitATCMRMC5$100$500$300$200$60--6$100$600$330$270$55$100$307$100$700$420$280$60$100$908$100$800$520$280$65$100$1009$100$900$630$270$70$100$110$280.$100.8 units.$65.$35.P=MR=$100 for all quantities of output. Hence the table belongs to a perfectly competitive firm.The profit maximizing level of output for a perfectly competitive firm is given at the point where marginal revenue (MR) equals marginal cost (MC) and MC is rising.

Answered: Fill in the following table for a firm…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Fill in the following table for a firm in a perfectly competitive industry.

Quantity	Price	TR	TC	Profit	ATC	MR	MC
5	$100	$500	$300
6	$100		$330		$100	$30
7	$100		$420
8	$100		$520
9	$100		$630

What is the highest profit possible?

What is the profit maximizing price?

What is the profit maximizing level of output? (Pick one if there are multiple levels of output with the same profit.)

What is the average total cost at profit maximization? (Use the same Q you used in c.)

What is the profit per unit at profit maximization?

How you do know that this is a table for a perfectly competitive firm?

In the table above, if you only had the columns Quantity, MR, and MC, explain how you still be able to find the profit-maximizing level of output.

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