Based on the following table Price Total Costs Output 10 10

Based on the following table Price Total Costs Output 10 10 10 10 10 10 10 10 10 10 10 15 18 24 34 48 67 93 129 4 10 units a. What is the profit-maximizing output? because (Click to select) ? b. In the long run, the market price will | (Click to select)

Solution

a) For finding out the profit-maximizing output we need to get : MR = MC

Marginal Cost (MC) = dTC / dQ : 0, 5 , 3, 1 , 3 , 6 , 10 , 14 , 19 , 26 , 36 ( the MC column .)

The MR is constant at all values of Q = 10 ( since price is constant ) .

MR = MC = 10 at 6th unit os Output .

answer : 6 units .

b) Long run market price will remain constant because it perfect competition , same price for any unit produced .