Assume that a firm in a perfectly competitive industry has the following total cost schedule:
O UT P UT (UN I T S ) T O TAL CO S T ( $ )
10 $110
15 150
20 180
25 225
30 300
35 385
40 480
a. Calculate a marginal cost and an average cost schedule for the firm.
b. If the prevailing market price is $17 per unit, how many units will be produced and sold? What are profits per unit? What are total profits?
c. Is the industry in long-run equilibrium at this price?