economics

A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue so $10, average total cost of $8 and fixed cost of $200.

a. what is the profit?
b. what is the marginal cost?
c. what is its average variable cost?
d. is the efficent scale of the firm more than, less than, or equal to 100 units?

  1. 👍
  2. 👎
  3. 👁
  1. a. 10*100-8*100=200
    b. because in a profit maximizing firm, firm will choose to sell product at the intersection of price, marginal revenue, and marginal cost. and also, in competitive market, marginal revenue=average revenue=price. thus marginal cost=marginal revenue=average revenue=10
    c. average variable cost=variable cost/quantity supplied
    variable cost= total cost- fixed cost=8*100-200=600
    average variable cost=600/100=6
    d. because the efficient scale is the point that intersection among marginal cost, price, and minimum average total cost. however, we can find that the average total cost is 8, price and marginal cost is 10. thus, the efficient scale of the firm is less than 100 units

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. Microeconomics

    A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and ficed costs of $200. What are the firm's profit, marginal cost, and average

  2. Economics

    you are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If the firm is

  3. microeconomics

    If for a firm MRP > MFC, then the firm: a. is maximizing profits and should continue producing its current output. b. is maximizing factor costs and therefore is maximizing profits. c. should produce more output by increasing the

  4. microeconomics

    Market demand is given as QD = 200 – 3P. Market supply is given as QS = 2P + 100. Each identical firm has MC = 0.5Q and ATC = 0.25Q. What quantity of output will a typical firm produce? a.10 b.20 c.30 d.40 Market demand is given

  1. Economics

    5. (Ch. 17 # 5) Sparkle is one firm of many in the market for toothpaste, which is in long-run equilibrium. a. Draw a diagram showing Sparkle’s demand curve, marginal revenue curve, average cost curve, and marginal cost curve.

  2. managerial economics

    A firm uses a single plant with costs C= 160 +16Q +.1Q2 and faces the price equation P= 96 – .4Q. a) Find the firm’s profit-maximizing price and quantity. What is the profit? b) The firm’s production manager claims that the

  3. Economics

    Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 - 4Q, and each firm has a constant marginal cost of $12 per unit. MR1 = 204 - 8q1 - 4q2. Let q1 be

  4. Economics

    50. In both monopolistic competition and non-price-discriminating monopoly, isn't the marginal revenue curve lies below the demand curve? 51. A monopolistically competitive firm is producing an output level where marginal revenue

  1. Micoreconomics

    As a general rule, profit-maximizing producers in a competitive maket produce output at a point where: A) Marginal cost is increasing B) Marginal cost is decreasing C) marginal revenue is increasing D) Price is less then marginal

  2. microeconomics

    A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200. Would the prevailing price be the same, higher, lower or

  3. Microeconomics

    Quantity Total Cost (Dollars) Variable Cost (Dollars) 0 $1,000 $0 100 1,360 360 200 1,560 560 300 1,960 960 400 2,760 1,760 500 4,000 3,000 600 5,800 4,800 Table 11-1 shows the short-run cost data of a perfectly competitive firm

  4. economy

    consider a perfectly competitive market in which all firms have the same costs. choose the statement that is incorrect a)the market demand is elastic at the market price b)each firm takes the market price as given and produces its

You can view more similar questions or ask a new question.