Quantity of Output Total Cost $12 1 $14 $18 3. $24 4. $32 $42 6. $54 $68 The table above shows the total cost function for a typical firm producing hats in a perfectly competitive market. The market price for hats is $9 per hat. (a) Calculate the average variable cost of the fifth unit. Show your work. (b) What is the firm's profit-maximizing quantity of hats? Explain using marginal analysis. (c) Draw a correctly labeled graph showing the firm's demand and marginal cost curves, and show the profit-maximizing quantity of hats determined in part (b).

Quantity of Output Total Cost $12 1 $14 $18 3. $24 4. $32 $42 6. $54 $68 The table above shows the total cost function for a typical firm producing hats in a perfectly competitive market. The market price for hats is $9 per hat. (a) Calculate the average variable cost of the fifth unit. Show your work. (b) What is the firm's profit-maximizing quantity of hats? Explain using marginal analysis. (c) Draw a correctly labeled graph showing the firm's demand and marginal cost curves, and show the profit-maximizing quantity of hats determined in part (b).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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