Suppose the market for microwave ovens is perfectly competitive. Also suppose a firm that produces microwave ovens has an average total cost of $200 when selling 200 units. The fixed cost is $100, and the average total cost when selling 201 units is $201. If the market price for a microwave oven is $500, this firm should sell 201 units because its fixed costs are so low. sell 200 units because the marginal cost of the 201st exceeds marginal revenue sell 201 units because it adds to profits. sell 201 units because the marginal cost of the 201st is less than marginal revenue.
Suppose the market for microwave ovens is perfectly competitive. Also suppose a firm that produces microwave ovens has an average total cost of $200 when selling 200 units. The fixed cost is $100, and the average total cost when selling 201 units is $201. If the market price for a microwave oven is $500, this firm should sell 201 units because its fixed costs are so low. sell 200 units because the marginal cost of the 201st exceeds marginal revenue sell 201 units because it adds to profits. sell 201 units because the marginal cost of the 201st is less than marginal revenue.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 38
Suppose the market for microwave ovens is
sell 201 units because its fixed costs are so low. |
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sell 200 units because the marginal cost of the 201st exceeds marginal revenue |
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sell 201 units because it adds to profits. |
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sell 201 units because the marginal cost of the 201st is less than marginal revenue. |
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