Question 1:
Suppose a firm operating in pure competitive industry. The firm maximizes its profit when:
Units of output produced: 20 units
Marginal Revenue (MR) = Marginal Cost (MC) = Price (P) = $50
Average Fixed Cost (AFC) = $15
Average Variable Cost (AVC) = $35
1. What is the average total cost (ATC)?
2. Does the firm realize a profit or a loss and why?
3. Will the firm produce or shut-down its business and why?
4. What is the profit or loss per unit?
5. What is firm''s total profit or total loss?
Question 2:
1. Suppose a firm''s total revenue is $750 when producing 30 units.
a) Determine the price per unit if the given firm is operating in pure competitive market.
b) What are the marginal and average revenues if the firm chooses to produce one more unit?
Question 3:
1. Suppose a firm''s total revenue is $500 when producing the price per unit is $25.
a) Determine the quantity produced by the firm.
b) What are the average and the marginal revenues if the firm chooses to produce one more unit?