Assume that a firm in a perfectly competitive industry has the following total cost schedule:
Output (units) Total Cost ($)
10 $110
15 150
20 180
25 225
30 300
35 385
40 480
Q1. Calculate a marginal cost and an average cost schedule for the firm.
Q2. 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?
Q3. Is the industry in long-run equilibrium at this price?