Consider the following table. Quantity Total Cost 0 $ 46 2 $ 47 4 $ 48 6 $ 49 8
ID: 1216124 • Letter: C
Question
Consider the following table.
Quantity
Total Cost
0
$ 46
2
$ 47
4
$ 48
6
$ 49
8
$ 51
10
$ 57
12
$ 65
14
$ 75
16
$ 87
In the long run, will the price rise or fall from the current level at $5? Explain the reason.
Below is the info I calculated
Quantity
Total Cost
0
$ 46
2
$ 47
4
$ 48
6
$ 49
8
$ 51
10
$ 57
12
$ 65
14
$ 75
16
$ 87
Explanation / Answer
here at P=5, firm is earning economic losss, this will be beared by firm in short run , until it's variable cost is covered by price. but in long run, economic losses needs to be eliminated, so for that price should rise until firms will reach a point where thay will earn zero economic profit
Quantity Total Cost MC AC total revenue profit= TR-TC 0 46 0 -46 2 47 0.5 23.50 10 -37 4 48 0.5 12.00 20 -28 6 49 0.5 8.17 30 -19 8 51 1 6.38 40 -11 10 57 3 5.70 50 -7 12 65 4 5.42 60 -5 14 75 5 5.36 70 -5 16 87 6 5.44 80 -7