QUESTION 20Study the table below which represents the cost and price schedules facing a perfectly competitive firm thatmanufactures bulbs. Use this information to answer the question.Quantity ofthe product01234Price perunit(R)101010101010c)d)38022222TotalrevenueTotalprofit(R)-10-9-5-6Marginalcost(R).9681013Averagevariable cost(R)9,007,507,678,259,20This perfectly competitive firm will producea) 3 bulbs, since losses are minimised.b)4 bulbs, but it will consider shutting down in the short run.4 bulbs, since at this production level it earns normal profit.4 bulbs and will stay in operation.

Business economics is the study of how organizations make decisions and allocate resources in the face of diverse obstacles. It assesses and optimizes production, pricing, and distribution in order to boost market profitability and efficiencyThe perfectly competitive firm will choose:d.) 4 bulbs and stay in operation. In the given example, the MR=MC is at 4 bulbs that is.. Furthermore, at the 4-bulb production level, the average variable cost happens to be $8.25, which is still less than the market price of $10. This highlights the situation wherein the firm is definitely not making any positive economic profits as such, however, because the price is still greater than the AVC, accordingly, the firm ought to stay in operation in the short run, and not leave the market hastily. Option a is incorrect because 3-bulb production does not align with the price-MC equality rule as for this output level, the price is greater than the marginal cost.Option B is incorrect because the firm will continue operations as the price is still greater than the average variable cost.Option c is incorrect because the firm does not earn any normal positive profit at the production level of 4.The perfectly competitive firm will choose:d.) 4 bulbs and stay in operation.