Question 1
Assume the following total cost schedule for a perfectly competitive firm.
Output | TVC ($) | TFC ($) |
0 | 0 | 100 |
1 | 40 | 100 |
2 | 70 | 100 |
3 | 120 | 100 |
4 | 180 | 100 |
5 | 250 | 100 |
6 | 330 | 100 |
TABLE 9-1
Refer to Table 9-1. If the market price were $75, this perfectly competitive firm wishing to maximize its profits would
◦ not produce because
P <
TFC.
◦ not produce because
P < minimum of
ATC.
◦ produce 6 units of output.
◦ produce 5 units of output.
◦ produce 2 units of output.
Question 2
Assume the following total cost schedule for a perfectly competitive firm.
Output | TVC ($) | TFC ($) |
0 | 0 | 100 |
1 | 40 | 100 |
2 | 70 | 100 |
3 | 120 | 100 |
4 | 180 | 100 |
5 | 250 | 100 |
6 | 330 | 100 |
TABLE 9-1
Refer to Table 9-1. What is the marginal cost of producing the 2nd unit of output?
◦ $30
◦ $35
◦ $10
◦ $5
◦ $15