A profit-maximizing firm in the short run has total fixed costs of $200. Its variable costs are
Question:
A profit-maximizing firm in the short run has total fixed costs of $200. Its variable costs are as below.
Output Total Variable Cost
0 $0
1 $190
2 $360
3 $510
4 $650
5 $800
6 $990
7 $1,190
8 $1,420
9 $1,770
10 $2,170
(A) (3 pts.) Calculate average total cost when output is 5 units.
ANSWER: ________
(B) (2 pts.)What is the marginal cost of the 9th unit of output?
ANSWER: ________
Answer C & D assuming that the firm can only produce integer amounts of output.
(C) (3 pts) Suppose this firm can sell all the output it wants in the short run at a price of $220.
How much output should it produce and sell and what will its profits (or losses) be?
ANSWER: Output will be ________
Profits or losses = ________
(D) (2 pts.) Suppose instead this firm can sell all the output it wants in the short run at a price of $155. Again, how much output should it produce and sell and what will its profits (or losses) be?
ANSWER: Output will be ________
Profits or losses = ________
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi