Question
Assume that you own a business that competes in a perfectly competitive industry producing a good...
Assume that you own a business that competes in a perfectly competitive industry producing a good that sells for $80. The table below represents some production alternatives for you. If you did maximize profits, how much profit would you earn? Output Total Cost 0 $20 1 $70 2 $110 3 $170 4 $250 5 $370 6 $570 None, this firm is losing money. $40 $70 $370
Homework Answers
Answer #1
In case of perfectly competitive market the profit get maximized at P = MC
From the given data calculate the MC by using the following formula
Refer the attached picture
Thus the firms will produce and sell 4 units of output. Since, at Q=4 marginal cost is equal to $ 80.
Thus, profit = TR - TC
Profit = $80*4 - 250
Profit = $ 320 - 250
Profit = $ 70.
Profit = $ 70
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