Question 3

Assume the table below is extracted from Dodi company Ltd a perfectly competitive firm selling cabbages. Assume that when the firm's selling price is AUD 15, the marginal revenue is also AUD15.

i. Complete the table below and answer the questions that follow.

Quantity (Kg)	AVC	AFC	ATC	MC
2.50	7.50	5.10
3.50	9.00	3.00		9.00
4.50	10.00	2.50		12.50
5.50	14.00	1.80		13.00
6.00	18.00	1.67		15.00
10.00	25.00	1.43		16.00

Qty = Quantity; AVC=Average variable cost; AFC = Average fixed cost; ATC=Average Total Cost; MC= Marginal Cost; Rev = Revenue; MR= Marginal Revenue; Kg = Kilogram

ii. Based on your answers to the table above, identify the profit maximizing quantiy supplied by the firm. Calculate the amount of profit/loss at this optimal point.

iii. State and examine the characteristics for a perfectly competitive firm such as Dodi Ltd selling cabbages.