Sunrise Juice Company sells its output in a perfect competitive market. The forms total cost function is given in the following schedule:
Output
(Units) Total Cost
($)
0 50
10 120
20 170
30 210
40 260
50 330
60 430
Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $ 7 per unit.
a) Prepare ( i ) marginal cost and ( ii ) average total cost for the firm.
b) What is the firms profit maximizing output level?
c) Is the industry in long-run equilibrium? Justify your answer.