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Question 7

Question 7: You are given the following data about two firms: FIRM A Quantity 0 1 2 3 4 5 6 Total revenue ($) 0 10 20 30 40 50 60 Average revenue ($) ___ ___ ___ ___ ___ ___ ___ Marginal revenue ($) ___ ___ ___ ___ ___ ___ Total cost ($) 30 42 50 60 76 100 140 Marginal cost ($) ___ ___ ___ ___ ___ ___ Average cost ($) ? ___ ___ ___ ___ ___ ___ FIRM B Quantity 0 1 2 3 4 5 6 Total cost ($) 100 134 154 177 216 266 366 Average cost ($) ? ___ ___ ___ ___ ___ ___ Marginal cost ($) ___ ___ ___ ___ ___ ___ Price ($) 140 130 120 110 100 90 80 Marginal revenue ($) ___ ___ ___ ___ ___ ___ Total revenue ($) ___ ___ ___ ___ ___ ___ ___ (a) Complete the two tables above. (4 marks) (b) Are these firms operating in the short or the long run? (1 mark) Firm A: short run / long run Firm B: short run / long run (c) Are these firms operating under perfect or imperfect competition? Firm A: perfect / imperfect (1 mark) Firm B: perfect / imperfect (c) What level of output will these firms produce in the short run? Firm A: (2 marks) Firm B: (d) How would you describe their profit positions? (2 marks) Firm A: Firm B:

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