Consider the following total cost schedule for a perfectly competitive firm prod

Question

Consider the following total cost schedule for a perfectly competitive firm producing ball point pens. schedu Output per period TVC (S) TEC (S 10 20 30 40 50 10 15 TABLE 9-3 E- 23) Refer to Table 9-3. If this firm were producing at an output level of 30 units, the AFC would be and the AVC would be A)$5, s6 - B) $0.20: $0.17 C) $6; $5 D) $0.10; $0.30 E) $0.17: $0.20 4) Refer to Table 9-3. What is the marginal cost of producing the 35th unit of output? A) $0.40 B) $0.17 C) $0.375 D) $0.10 E) $0.50 25) On a graph showing a firm's TC and TR curves, the profit-maximizing level of out is found where A) TR becomes vertical. B) TR is at a maximum. C) TR and TC intersect. D) TC intersects the vertical axis. E) TR lies above TC by the greatest amount. 26) Which of the following statements about a perfectly competitive industry in lorn equilibrium is true? A) In order to stay in the industry each firm is making an economic profit. B) Each firm is producing at the minimum point on its LRAC curve. C) Losses are tolerable because of high fixed costs.

Explanation / Answer

24. Ans: $0.40

Explanation:

        MC($)    

MP of 35th unit = (15-11) / (40 -30) = $0.40

Output(Q) TVC($) TFC($) TC($) = TFC+TVC

        MC($)    

0 0 5 5 10 2 5 7 0.2 [i.e. (7-5) / (10 - 0)] 20 3 5 8 0.1 [i.e. (8-7) / (20 -10)] 30 6 5 11 0.3 [i.e. (11-8) / (30 -20)] 40 10 5 15 0.4 [i.e. (15-11) / (40 -30)] 50 15 5 20 0.5 [i.e. (20-15) / (50 -40)]

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