Consider total cost and total revenue given in the table below:
Quantity total cost total revenue
0 $8 0
1 $9 8
2 $10 16
3 $11 24
4 $13 32
5 $19 40
6 $27 48
7 $37 56
1. Calculate profit for each quantity. How much should the firm produce to maximize profit?
2. Calculate marginal revenue and marginal cost for each quantity. Graph them. At what quantity do these curves cross? How does this relate to your answer to part (a)?
3. Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?