Section C: Review of Short-run Profit Maximization for a Perfectly Competitive Firm C.1: The short-run cost data below are for a perfectly competitive firm. The product price is $4 per unit. ATC MC Output AFC AVC n.a. n.a. 0 n.a. n.a. $7.00 $57.00 $7 $50.00 $25.00 $6.00 $31.00 $5 2 3 $16.67 $4.67 $21.33 $2 4 $12.50 $4.50 $17.00 $4 UT $10.00 $5.00 $15.00 $7 6 $8.33 $6.00 $14.33 $11 7 $7.14 $7.43 $14.57 $16 8 $6.25 $9.25 $15.50 $22 9 $5.56 $11.44 $17.00 $29 10 $5.00 $13.90 $18.90 $36 (i) What is the range of output within which the firm can cover its variable costs of production while producing an output level in that range? Answer: from units to units (Mark as "N.A." in the above two locations if the range of output does not exist.) (ii) What is the firm's profit-maximizing output quantity? Answer: units (iii) What is the firm's total fixed costs? Answer: $ (iv) What is the firm's total profit? (Enter a negative sign if the profit is negative.) Answer: $C.2: The short-run cost data below are for a perfectly competitive firm. The product price is $5.5 per unit. Output AFC AVC ATC MC O n.a. n.a. n.a n.a. $50.00 $7.00 $57.00 $7 N $25.00 $6.00 $31.00 $5 3 $16.67 $4.67 $21.33 $2 4 $12.50 $4.50 $17.00 UT $10.00 $5.00 $15.00 $7 6 $8.33 $6.00 $14.33 $11 7 $7.14 $7.43 $14.57 $16 8 $6.25 $9.25 $15.50 $22 9 $5.56 $11.44 $17.00 $29 10 $5.00 $13.90 $18.90 $36 (i) What is the range of output within which the firm can cover its variable costs of production while producing an output level in that range? Answer: from units to units (Mark as "N.A." in the above two locations if the range of output does not exist.) (ii) Invoking P = MC Rule, what is the firm's profit-maximizing output quantity? Answer: units (iii) Given (ii), what is the firm's total profit? Answer: $_ (Include a negative sign as needed.) (iv) What would have been the firm's total profit if it were to shut down temporarily? Answer: $ (Include a negative sign as needed.) Answer: (v) Should the firm produce or shut down? 15Consider a perfectly competitive firm facing an output price of $61 per unit. The firm's short-run cost structure is depicted by its MC, ATC, AVC curves in the diagram below. C.3: MC $150 ATC $85 AVC $90 $64- $61 P= $61 $64 3 4 5 6 8 9 10 Output Quantity (i) What is the range of output within which the firm can cover its variable costs of production while producing an output level in that range? Answer: from units to units (Mark as "N.A." in the above two locations if the range of output does not exist.) (ii) What is the firm's profit-maximizing output quantity? Answer: units (iii) What is the firm's total fixed costs? Answer: $ (iv) What is the firm's total profit? Answer: $ (Enter a negative sign if the profit is negative.)un ca C.4: Consider a perfectly competitive firm facing an output price of $80 per unit. The firm's short-run cost structure is depicted by its MC, ATC, AVC curves in the diagram below. MC $95 $95 $85 ATC $85 AVC $80 P = $80 $80 $77.5 $80 12 18 Output Quantity (i) What is the range of output within which the firm can cover its variable costs of production while producing an output level in that range? Answer: from units to units (Mark as "N.A." in the above two locations if the range of output does not exist.) (ii) Invoking P = MC Rule, what is the firm's profit-maximizing output quantity? Answer: units (iii) Given (ii), what is the firm's total profit? (Include a negative sign as needed.) Answer: $ (iv) What would have been the firm's total profit if it were to shut down temporarily? (Include a negative sign as needed.) Answer: $_ (v) Should the firm produce or shut down