Home » A profit-maximizing firm in the short run has total fixed costs of $100 . Its variable costs are as below.

A profit-maximizing firm in the short run has total fixed costs of $100 . Its variable costs are as below.

A profit-maximizing firm in the short run has total fixed costs of $100. Its variable costs are as below.

Output     Total Variable Cost

        0                         $0

        1                         $40

        2                         $72

        3                         $96

        4                         $124

        5                         $155

        6                         $192

        7                         $232

        8                         $280

        9                         $330

        10                       $430

(A)   (3pts.) Calculate average total cost when output is 5 units.

                                                                ANSWER: ________

(B)   (2 pts.)What is the marginal cost of the 7th unit of output?

                                                                ANSWER: ________

Answer C & D in the short run and 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 $52.

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 $28. Again, how much output should it produce and sell and what will its profits (or losses) be?

                  ANSWER: Output will be                ________

                                   Profits or losses =  ________







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