Discussion:
A purely competitive firm finds that the market price for its product is $20. It has a fixed cost of $100 and a variable cost of $10 per unit for the first 50 units and then $25 per unit for all successive units. *Does price exceed average variable cost for the first 50 units? What about for the first 100 units?
*What is the marginal cost per unit for the first 50 units? What about for units 51 and higher?
*For each of the first 50 units, does MR exceed MC? What about for units 51 and higher?
*What output level will yield the largest possible profit for this purely competitive firm?