Question

2.

A purely competitive firm finds that the market price for its product is $30.00. It has a fixed cost of $100.00 and a variable cost of $15.00 per unit for the first 50 units and then $35.00 per unit for all successive units.

Instructions: Round your answers to 2 decimal places.

a. Does price equal or exceed average variable cost for the first 50 units?

        (Click to select)  No  Yes

     What is the average variable cost for the first 50 units?

    

b. Does price equal or exceed average variable cost for the first 100 units?

        (Click to select)  Yes  No

     What is the average variable cost for the first 100 units?

    

c. What is the marginal cost per unit for the first 50 units?

Answer 1

OUTPUT	TFC	TVC	AVC	MC
0	100	0	0
				15
50	100	750	15
				35
100	100	2500	25
Note: Total variable cost at 100 units= 50 units @15 + 50 units @35
Req a:
YES, Price of $ 30 per unit exceed the Average variable cost per unit of $15 per unit at 50 units
The Average variable cost for the first 50 units is $15 per unit
Req b:
YES, the price of $30 per unit exceed the Average variable cost of $35 per unit at 100 units
The average variable cost per unit is $ 25 per unit at 100 units of production.
Req C:
The marginal cost for the first 50 units is $15 per unit