Question
Consider the following hourly demand and cost schedule for a Perfectly Competitive firm facing a fixed price. (T, is Total Profit). Q P TRMRTCTVCMCATCAVCT 0$8.00$3.00
Consider the following hourly demand and cost schedule for a Perfectly Competitive firm facing a fixed price. (T, is Total Profit).
Q P TRMRTCTVCMCATCAVCT
0$8.00$3.00
14
26
3 8
411
515
620
726
833
941
1050
1160
a.Complete the columns for ATC, AVC, and MC as well as those for (TC), TVC, & TFC.
b.Draw the curves for Demand, MR (Marginal Revenue), ATC, AVC, and MC, all in one diagram. Also draw the Total Revenue (TR), Total Cost (TC), TVC, and TFC in a second diagram right below the first one.
c.Determine, in order to maximize profit, how many units should this firm produce and why?
d.Calculate the total profit at the profit-maximizing level and demonstrate it graphically and geometrically in both diagrams.
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