ur answer, should the firm continue or stop the production? Justify. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5

ur answer, should the firm continue or stop the production? Justify. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter22: Supply: The Costs Of Doing Business

Section: Chapter Questions

Problem 17E

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Question

The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4.

If the average revenue falls to RM3 per unit, calculate the firm’s new profit or loss at the equilibrium. Based on your answer, should the firm continue or stop the production? Justify.

Output (Units)	Total Revenue (RM)	Average Cost (RM)	Total Cost (RM)	Marginal Cost (RM)	Marginal Revenue (RM)
1		8.0
2		5.5
3		4.0
4		3.5
5		3.8
6		4.5
7		6.0

Total Revenue
Average Cost
(RM)
Total Cost
Marginal Cost
(RM)
Marginal
Revenue (RM)
Output
(Units)
(RM)
(RM)
1
8.0
2
5.5
3
4.0
4
3.5
3.8
6
4.5
7
6.0
Fill in the values for total revenue (TR), total cost (TC) and marginal cost (MC) in the column
provided.

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