What level of output should this firm produce

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Reference no: EM13157262

The graph on the left shows the short-run marginal cost curve for a typical firm selling in a perfectly competitive industry. The graph on the right shows current industry demand and supply.

989_What level of output should this firm produce.png

a. What is the marginal revenue that this perfectly competitive firm will earn on its 60^th unit of output?

b. What level of output should this firm produce in order to maximize profit or minimize losses? (This isn't two questions; the same level of output would do either.)

c. Given your answer to question (b) above, assume that ATC at that level of output is $10. What are the firm's profits?

d. Now assume that the firm produces 100 units of output and at that level of output ATC = $11. How many firms in total will there be in this market?

e. Finally, assume the firm produces 100 units of output and at that level of output its ATC are $13 but its AVC are $11. What should the firm do and why?

Reference no: EM13157262

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