ECO100Y1 Lecture Notes - Fixed Cost
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This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
Quantity |
Price |
Marginal Cost |
Average Total Cost |
0 |
$50 |
-- |
-- |
1 |
$45 |
$30 |
$40 |
2 |
$40 |
$24 |
$32 |
3 |
$35 |
$14 |
$26 |
4 |
$30 |
$10 |
$22 |
5 |
$25 |
$12 |
$20 |
6 |
$20 |
$32 |
$22 |
7 |
$15 |
$50 |
$26 |
8 |
$10 |
$74 |
$32 |
9 |
$5 |
$104 |
$40 |
10 |
$0 |
$140 |
$50 |
Refer to Table 16-4. How much profit will this firm earn when it chooses its output to maximize profit?
Ā | a. |
an $8 profit |
Ā | b. |
a $12 loss |
Ā | c. |
a $25 profit |
Ā | d. |
a $32 profit |
Ā
Units of labor |
Units of Output |
Average Product |
Marginal Product |
Fixed Cost |
Variable Cost |
Total Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
Profit |
Producer Surplus |
1 |
5 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
2 |
15 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
3 |
30 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
4 |
50 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
5 |
65 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
6 |
77 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
7 |
86 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
8 |
94 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
9 |
98 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
10 |
96 |
Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā | Ā |
The firm has fixed costs of $50, labor costs the firm $10 per unit, and the firm faces a market-determined price of $2.00 per unit of output. Complete the above table.