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Question :
(TCO C) Answer the next questions on the basis of the following cost
data for a firm in pure competition:
OUTPUT ------ TFC ---------- TVC
0 $100.00 0.00
1 100.00 70.00
2 100.00 120.00
3 100.00 150.00
4 100.00 200.00
5 100.00 270.00
6 100.00 360.00
(a.) (15 points) Refer to the above data. If the product price is $45 at its
optimal output, will the firm realize an economic profit, break even, or
incur an economic loss? How much will the profit or loss be? Show all
calculations.
(b.) (15 points) Refer to the above data. If the product price is $75 at its
optimal output, will the firm realize an economic profit, break even, or
incur an economic loss? How much will the profit or loss be? Show all
calculations.
5.
Question :
(TCO D) A software producer has fixed costs of $18,000 per month and
her Total Variable Costs (TVC) as a function of output Q are given
below:
Q TVC Price
1,000 $15,000 $25
2,000 20,000 24
3,000 30,000 23
4,000 50,000 22
5,000 80,000 20