Question: 3 . Table 1 Q TR TC TVC ATC AVC TFC AFC P 2 0 0 0 4 0 0 0 3 6 0 0

3 .

Table

1

Q TR TC TVC ATC AVC TFC AFC P

2000 4000 3600 2.2

Q: Quantity; TR: Total Revenue; TC: Total Cost; TVC: Total Variable Cost; ATC:Average Total Cost; AVC: Average Variable Cost; TFC: Total Fixed Cost; AFC:Average Fixed Cost; P: Price.

(

)

Complete the Table

1 . (

)

A perfectly competitive firm currently faces conditions shown in Table

1 .

At itscurrent level of production, the AVC

(

Average Variable Cost

)

of the firm isminimized, suggesting that its MC

(

Marginal Cost

)

equals its AVC

(

Average VariableCost

) .

Is the firm maximizing its profit? Explain why.

(

)

If you were the consultant hired by the firm, how would you suggest the firmmanager to do in the short run? Explain why? A graphical analysis is required.

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