Suppose that a firm produces 300,000 units a year and sells them all for $9 each. The explicit costs of production are $2,000,000 and the implicit costs of production are $350,000. The firm earns an accounting profit of

• A) $700,000 and an economic profit of $350,000.
• B) $2,700,000 and an economic profit of $300,000.
• C) $300,000 and an economic profit of $2,700,000.
• D) $350,000 and an economic profit of $700,000.

The question is based on the following table, which provides information on the production of a product that requires one variable input.

Input Total Product

0 0

1 5

2 20

3 32

4 42

5 50

6 55

7 58

8 58

9 56

With the addition of the sixth unit of input, the marginal product is

Multiple Choice

• 5 and the average product is 55.
• 105 and the average product is 9.17.
• 5 and the average product is 9.17.
• 9.17 and the average product is 5.

Answer the question based on the demand and cost schedules for a monopolistically competitive firm given in the table below.

Price Quantity Demanded Total Cost Output

$24 1 $10 1

20 2 20 2

16 3 29 3

12 4 36 4

8 5 40 5

4 6 42 6

What output quantity will the monopolistically competitive firm produce to maximize profits?

Multiple Choice

3

4

2

5