The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. Determine the profit-maximizing output and show the equilibrium of the firm in a diagram.Output (Units)Total Revenue (RM)Average Cost (RM)Total Cost (RM)Marginal Cost (RM)Marginal Revenue (RM)1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5 7 6.0 Total RevenueAverage Cost(RM)Total CostMarginal Cost(RM)MarginalRevenue (RM)Output(Units)(RM)(RM)18.025.534.043.53.864.576.0Fill in the values for total revenue (TR), total cost (TC) and marginal cost (MC) in the columnprovided.

Given: Average revenue (AR) =RM5 per unit Firm’s total fixed cost (TFC) =RM4.

Answered: The table below shows the average cost…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. Determine the profit-maximizing output and show the equilibrium of the firm in a diagram.

Output (Units)	Total Revenue (RM)	Average Cost (RM)	Total Cost (RM)	Marginal Cost (RM)	Marginal Revenue (RM)
1		8.0
2		5.5
3		4.0
4		3.5
5		3.8
6		4.5
7		6.0

Total Revenue
Average Cost
(RM)
Total Cost
Marginal Cost
(RM)
Marginal
Revenue (RM)
Output
(Units)
(RM)
(RM)
1
8.0
2
5.5
3
4.0
4
3.5
3.8
6
4.5
7
6.0
Fill in the values for total revenue (TR), total cost (TC) and marginal cost (MC) in the column
provided.

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