Application of Perfect Competition decision making process to max profits You have been hired as a consultant
Question:
Application of Perfect Competition decision making process to max profits
You have been hired as a consultant to make recommendations to the 4 firms listed below. Each of the competitors wants to maximize profits. Each row represents a separate firm. Apply the rules of marginal analysis to help you advise each of the firms separately. For example should they increase or decrease output, do nothing, or shut down.
Explain your rationale for each firm (why you made the recommendations you listed)
Perfect Competition firms:
Price | Q | TR | TC | P/L | TVC | ATC | AVC | MC |
4 | 100 | 400 | 350 | +50 | 300 | 3.5 | 3 | 5 |
10 | 20 | 200 | 500 | -300 | 300 | 25 | 15 | 10 |
50 | 100 | 5000 | 5100 | -100 | 3000 | 51 | 30 | 90 |
25 | 100 | 2500 | 2500 | 0 | 2000 | 25 | 20 | 25 |
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford