Question

For this activity, you must apply formulas for total variable cost, average variable cost, average total cost, and marginal cost, and use these computations to determine maximum profit

A firm’s cost curves are given in the following table:

Q	TC	TFC	TVC	AVC	ATC	MC
0	100	100
1	155	100
2	195	100
3	215	100
4	245	100
5	300	100
6	360	100
7	435	100
8	515	100
9	605	100

a) Complete the table.

b) Graph AVC, ATC, and MC on the same graph. What is the relationship between the MC curve and ATC, and between MC and AVC?

c) Suppose the market price is $65. How much will the firm produce in the short run? What is the amount of total profits or losses?

d) Suppose the market price is $36. How much will the firm produce in the short run? What is the amount of total profits or losses?

Answer 1