If the firm sells 5 units at a price of $30 each, then theQuantity Cost01230156(in Costsdollars) (in0Fixed Total AverageCostsTotal Costs(in (in dollarsper unit)3560dollars) dollars)15 40 5540 4040 75 37.540 100125 40 16555160 40 200marginal unit producedAverage VariableCosts (in dollars perunit)90 40 130 32.5 22.51533.317.533.3 2026.6MarginalCosts(in dollarsper unit)152040is subtracting from profits.the purchase price is higher than the averagecost.the purchase price is the same as the averagecost.is adding to profits.

Where the marginal revenue is equal to marginal cost to maximize its profit. Profit is the difference between the total revenue and total cost.Total revenue is = (Price X Quantity). Average cost is =Total cost /Quantity. Profit per unit is calculated as the price minus average cost. Marginal cost is the change in total production cost that comes from making or producing one additional unit. Marginal revenue is calculated as the change in revenue divided by the change in quantity for any two given levels of sales. Given, A table showing the cost and revenue schedule. The price is $30the quantity is 5 units As per the table, If the firm sells 5 units at a price of $30 each, then the marginal unit produced is subtracting from profits.When the firm is selling 5 units at a price of 30, the marginal cost is 35 and the average cost is 33. Hence MC is not equal to AC. Also, the MC is not less than AC but it is greater.Also since P < AC, there are losses.Hence B, C and D are incorrect.Option (A) is correct.(A) Is subtracting from profits.

Business

Economics

If the firm sells 5 units at a price of $30 each, then the Quantity Cost Fixed Total Average (in Costs Costs Total Costs 0 1 2 3 4 so dollars) (in (in (in dollars dollars) dollars) per unit) 6 0 15 40 40 40 55 55 35 40 75 5 125 40 90 40 60 40 100 33.3 .. 37.5 130 32.5 160 40 200 165 33 marginal unit produced 33.3 Average Variable Costs (in dollars per unit) : 15 17.5 20 22.5 25 26.6 Marginal Costs (in dollars per unit) : 15 20 25 30 35 40 is subtracting from profits. the purchase price is higher than the average cost. the purchase price is the same as the average cost. is adding to profits.

If the firm sells 5 units at a price of $30 each, then the Quantity Cost Fixed Total Average (in Costs Costs Total Costs 0 1 2 3 4 so dollars) (in (in (in dollars dollars) dollars) per unit) 6 0 15 40 40 40 55 55 35 40 75 5 125 40 90 40 60 40 100 33.3 .. 37.5 130 32.5 160 40 200 165 33 marginal unit produced 33.3 Average Variable Costs (in dollars per unit) : 15 17.5 20 22.5 25 26.6 Marginal Costs (in dollars per unit) : 15 20 25 30 35 40 is subtracting from profits. the purchase price is higher than the average cost. the purchase price is the same as the average cost. is adding to profits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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