A purely competitive firm finds that the market price for its product is $25.00. It has a fixed cost of $100.00 and a variable cost of $15.00 per unit for the first 50 units and then $30.00 per unit for all successive units.
Instructions: Round your answers to 2 decimal places.
a. Does price equal or exceed the average variable cost for the first 50 units? (Click to select)YesNo.
What is the average variable cost for the first 50 units? $.
b. Does price equal or exceed the average variable cost for the first 100 units? (Click to select)YesNo.
What is the average variable cost for the first 100 units? $.
c. What is the marginal cost per unit for the first 50 units? $ per unit.
What is the marginal cost for units 51 and higher? $ per unit.
d. For each of the first 50 units, does MR exceed MC? (Click to select)NoYes.
What about units 51 and higher? (Click to select)NoYes.
e. What output level will yield the largest possible profit for this purely competitive firm? units.
A purely competitive firm finds that the market price for its product is $25.00. It has a fixed cost of $100.00 and a variable cost of $15.00 per unit for the first 50 units and then $30.00 per unit for all successive units.
Instructions: Round your answers to 2 decimal places.
a. Does price equal or exceed the average variable cost for the first 50 units? (Click to select)YesNo.
What is the average variable cost for the first 50 units? $.
b. Does price equal or exceed the average variable cost for the first 100 units? (Click to select)YesNo.
What is the average variable cost for the first 100 units? $.
c. What is the marginal cost per unit for the first 50 units? $ per unit.
What is the marginal cost for units 51 and higher? $ per unit.
d. For each of the first 50 units, does MR exceed MC? (Click to select)NoYes.
What about units 51 and higher? (Click to select)NoYes.
e. What output level will yield the largest possible profit for this purely competitive firm? units.
