Question

(a) Complete the following cost and revenue schedules for a perfectly competitive firm:

Quantity Price ( $Total Revenue ($) Total Cost ($) Profit ($) Marginal Cost ($)
0 60 50 ---
1 60 60
2 60 90
3 60 140
4 60 200
5 60 280
(b) Graph MC and price.
(c) What rate of output maximizes profit?
(d) What is MC at that rate of output?

Answer 1

(a) See the attached excel file

(b) See the attached photo

(c) Quantity 4

(d) MC = $60

Step-by-step explanation:

Note: The data in the question are merged but they are first sorted appropriately before answering the question in the attached excel file.

(a) Complete the following cost and revenue schedules for a perfectly competitive firm

Note: See the attached excel file for the schedule

The following formula are used in the table:

Total revenue = Quantity * Price

Profit = Total revenue - Total cost

Marginal cost = New unit total cost - Previous unit total cost

(b) Graph MC and price.

Note: See the attached photo for the graph

(c) What rate of output maximizes profit?

The rate of output that maximizes profit occurs where MC = Price. This occurs at quantity 4 on the attached excel file and point A in the attached graph where MC = Price = $60

(d) What is MC at that rate of output?

From part (c), MC at that rate of output is $60.