Context:

(The Short-Run Firm Supply Curve) Use the following data to answer the questions below,

Q VC MC AVC

1 $10 ______ ______

2 $16 ______ ______

3 $20 ______ ______

4 $25 ______ ______

5 $31 ______ ______

6 $38 ______ ______

7 $46 ______ ______

8 $55 ______ ______

9 $65 ______ ______

Question:

a. Calculate the marginal cost and average variable cost for each level of production.

b. How much would the firm produce if it could sell its product for $5? For $7? For $10?

c. Explain your answers.

d. Assuming that its fixed cost is $3, calculate the firm's profit at each of the production levels determined in part (b).

(The Short-Run Firm Supply Curve) Each of the following situations could exist for a perfectly competitive firm in the short run. In each case, indicate whether the firm should produce in the short run or shut down in the short run, or whether additional information is needed to deter- mine what it should do in the short run.

a. Total cost exceeds total revenue at all output levels.

b. Variable cost exceeds total revenue at all output levels.

c. Total revenue exceeds fixed cost at all output levels.

d. Marginal revenue exceeds marginal cost at the current output level.

e. Price exceeds average total cost at all output levels.

f. Average variable cost exceeds price at all output levels.

g. Average total cost exceeds price at all output levels.