Simple problem-solving scenario using applied practice in perfect competition:

A local snow cone business sells snow cones in one size for $3 each in a perfectly competitive market. It has the following cost and output structure:

Output (cones per hour) Total Cost per hour ($) Total Revenue per hour ($)

0 60 0

10 90 30

20 110 60

30 120 90

40 125 120

50 135 150

60 150 180

70 175 210

80 225 240

What is the profit maximizing level of output? Do you think the firm is operating in the short run or in the long run? Use Marginal Analysis.