Question 1:

(70 Marks)

Consider total cost and total revenue of a firm given in the following table:

Quantity 0 1 2 3 4 5 6 7 8

Total Cost $ 3 5 8 12 17 23 30 38 47

Total

Revenue

$ 0 10 18 24 28 30 30 28 24

Question 1.a.) (5

Marks)

Calculate profit for each quantity. How much should the firm produce to maximize

profit?

Question 1.b.) (5 Marks)

Calculate marginal revenue and marginal cost for each quantity. Graph them. At what

quantity do these curves cross? How does this relate to your answer to part (a)

Question 1.c.) (5

Marks)

Can you tell whether this firm is in a competitive industry? If no, specify the market

structure.

Question 1.d.) (5 Marks)

If the price is $9. How much of the quantity the firm is going to supply.

Question 1.d.) (5

Marks)

Explain whether this firm is experiencing economies of scale, constant return or diseconomies of

scale?