A firm in a competitive market has fixed costs of $3 and the following structure
Question # 00318546
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Updated on: 06/19/2016 06:45 AM Due on: 06/19/2016
3 part question: A firm in a competitive market has fixed costs of $3 and the following structure of average total cost:
Output | Average Total Cost |
0 | -- |
1 | $10 |
2 | $8 |
3 | $7 |
4 | $8 |
5 | $10 |
- 1.) Find the marginal cost of producing each unit of output. Your answer should consist of five numbers, one for output = 1, one for output = 2, one for output = 3, one for output = 4, and one for output = 5.
- 2.) If the market price is $10, what is the firm’s profit maximizing level of output? Explain.
- 3.) What are the firm’s profits at the profit-maximizing output level? Explain.
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Solution: A firm in a competitive market has fixed costs of $3 and the following structure