Question 1 Would a perfectly competitive firm engage in advertising? Explain. _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Question 2 Consider total cost
Question:
Question 1
Would a perfectly competitive firm engage in advertising? Explain.
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Question 2
Consider total cost and total revenue given in the following table:
Quantity
0
1
2
3
4
5
6
7
Total Cost
RM8
9
10
11
13
19
27
37
Total Revenue
RM0
8
16
24
32
40
48
56
a)Calculate profit for each quantity. How much should the firm produce to maximize profit?
b)Calculate marginal revenue and marginal cost for each quantity. Graph them.
c)At what quantity do these curves cross?
d)How does this relate to your answer to part (a)?
Calculation:
Quantity
0
1
2
3
4
5
6
7
Total Cost
RM8
9
10
11
13
19
27
37
Total Revenue
RM0
8
16
24
32
40
48
56
Total Profit
Marginal Cost
Marginal Revenue
Graph:
Expert Answer:
