A perfectly competitive industry is composed of 100 identical firms with cost structure: q TC VC FC AVC ATC MC 0 4 1 8 2 10 3 14 4 20 5 28 6 38 b) Assuming that the market price is p = 8, what are the quantity produced by each firm and the profit it makes?
A
q TC VC FC
0 4
1 8
2 10
3 14
4 20
5 28
6 38
b) Assuming that the market price is p = 8, what are the quantity produced by each firm and the profit it makes?
The variable cost can be calculated by using the below formula:
If Q is 1 and TC is 8, then the variable cost can be calculated by using equation (1) as follows:
The average variable cost can be calculated by using the below formula:
If Q is 1 and VC is 4, then the average variable cost can be calculated by using equation (2) as follows:
The average total cost can be calculated by using the below formula:
If Q is 1 and TC is 8, then the average total cost can be calculated by using equation (3) as follows:
Marginal cost can be calculated by using the below formula:
If Q is 1, then the marginal cost can be calculated by using equation (4) as follows:
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