Question 1

The following table presents data on the output produced at different levels of labour inputs and pays a rent of 2000.

Q 0 1 2 3 4 5 6 7 8 9 10

TC 2000 2600 3000 3200 3440 3700 4200 4800 5600 6600 7800

FC

VC

VC

ATC

MC

i)Complete the table

ii)Discuss the relationship between the MC curve and the ATC curve and between the MC curve and the AVC curve.

iii)Suppose the firm is operating in a perfectly competitive industry and the market price is 600. How much will the firm produce in the short run?