Problem 1: If the total cost schedule for a perfectly competitive firm is and if market price is $60, how many units of putput will the firm produce?
a. 0 units of output because the firm shuts down
b. 2 units of output
c. 3 units of output
d. 4 units of output
e. none of the above
Output Total Cost
0 $10
1 60
2 80
3 110
4 165
5 245
Problem 2: A firm is in the short run competitive equilibrium. The price of a substitute item increases
a. The product price will rise
b. New firms wil lenter the market
c. Firms will begin earning economic profit
d. a & b
e. All of the above