Bob produces flower pots for sale, which he designs and manufactures using 3-D printing technology. Bob rents a building for $30,000 per month and rents machinery for

$20,000 a month. Those are his fixed costs. His variable cost per month is given in the accompanying table.

a. Calculate Bob’s average variable cost, average total cost, and marginal cost for each quantity of output.

b. There is free entry into the industry, and anyone who enters will face the same costs as Bob. Suppose that currently the price of a flower pot is $25. What will Bob’s profit be? Is this a long-run equilibrium? If not, what will the price of a flower pot be in the long run?

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Quantity of flower pots 0 1,000 == VC $0 5,000 2,000 8,000 3,000 9,000 4,000 14,000 5,000 20,000 6,000 33,000 7,000 49,000 8,000 72,000 9,000 99,000