The following table presents the fixed and variable costs for a clothing manufacturer.
a. Fill in each column using the appropriate formulas (you are permitted to use Excel, simply copy/paste back and forth).
|
Q
|
F
|
VC
|
TC
|
AFC
|
AVC
|
AC
|
MC
|
|
0
|
20
|
0
|
|
|
|
|
|
|
1
|
20
|
5
|
|
|
|
|
|
|
2
|
20
|
8
|
|
|
|
|
|
|
3
|
20
|
10
|
|
|
|
|
|
|
4
|
20
|
12
|
|
|
|
|
|
|
5
|
20
|
16
|
|
|
|
|
|
|
6
|
20
|
22
|
|
|
|
|
|
|
7
|
20
|
29
|
|
|
|
|
|
|
8
|
20
|
38
|
|
|
|
|
|
|
9
|
20
|
48
|
|
|
|
|
|
|
10
|
20
|
60
|
|
|
|
|
|
b. The clothing manufacturer is in a perfectly competitive industry. Currently, clothes are selling at $10 per unit. How many units of clothing will this firm produce?
c. Is the production in part (b) the long-term equilibrium for the industry? Explain thoroughly.
d. What is the long term equilibrium price in the industry? How many units will this firm produce at the price?
e. What is the lowest price at which this firm will remain the market in the short-term? Explain thoroughly.