Perfect Competition Problem Set[1]

1. Suppose that the price of Oranges is $4. In addition, suppose that the firm's total costs are $32 and that the firm currently sells 110 Oranges.

Given this information, what is this firm's total revenue?

Use the following information to answer questions 2 through 5:

The table below shows data for the production of avocados for an individual firm operating in a perfectly competitive market.

Quantity of avocados	Total Revenue	Total Costs
0	0	10
10	60	30
20	120	40
30	180	60
40	240	90
50	300	130
60	360	180
70	420	240
80	480	310

2. Given this data, complete the table:

Quantity of avocados	Marginal Revenue (MR)	Marginal Costs (MC)	Profit
0	-	-
10
20
30
40
50
60
70
80

3. At what quantity does this firm maximize its profit?

NOTE: If there are two quantities with the same level of profits, pick the larger of the two quantities!

4. What is marginal revenue at the profit maximizing quantity?

NOTE: If there are two quantities with the same level of profits, pick the larger of the two quantities!

5. What is marginal cost at the profit maximizing quantity?

NOTE: If there are two quantities with the same level of profits, pick the larger of the two quantities!

6. The graph below shows cost curves for a firm operating in a perfectly competitive market.

21 + 20 19 18+ 17 16+ + Price of Oranges 6 7 Quantity of Oranges