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A firm has the following total costs, where Q is output and TC is total cost: Q TC 0 $ 100 1 110 2 130

A firm has the following total costs, where Q is output and TC is total cost:

Q

TC

0

$ 100

1

110

2

130

3

160

4

200

5

250

6

310

7

380

8

460

9

550

10

650

11

760

a.            Say the firm is in a perfectly competitive market. If the current market (equilibrium) price is $ 70, at what output level will the firm as a profit maximizer produce at?

b.            Say the market price rises to $ 100. At what output level (as a perfect competitor) will this produce at?

c.             How much profit is the firm making at a price of $90? Based on this calculation, do you expect firms to enter or leave this market?

d.            Say instead this firm is a monopoly. If the firm maximizes profit at an output level where marginal revenue equals $ 80, what output level will this be?

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a The firm will produce at 3 units of output Total cost at 3 units of output is 160 Total revenue at 3 units of output is 210 70 x 3 Profit Total reve... blur-text-image

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