Assume the following total cost schedule for a perfectly com

Assume the following total cost schedule for a perfectly competitive firm. Output TVC ($) 0 40 70 WN TFC ($) 100 100 100 100 100 100 100 120 180 250 330 6 TABLE 9-2

Solution

Output TVC $ TFC $ Total cost (TVC+TFC) Marginal Cost 0 0 100 100 - 1 40 100 140 40 2 70 100 170 30 3 120 100 220 50 4 180 100 280 60 5 250 100 350 70 6 330 100 430 80 Profit maximization in the long run for a perfectly competitive firm is MR=MC, and when total costs are covered. When the price is $70 per unit ( MR=P), then MR=MC and total costs are covered. This is the profit maximization with zero economic profit or normal profit. So Answer is B