ses Home You are given the following cost data Total fixed c

ses Home You are given the following cost data: Total fixed costs are $15 TVC ments Plan lts rson eTextcompetive market)? 2 4 6 30 60 105 165 255 375 If the price of output is $60, how many units of output will this firm produce (assuming the firm produces in the short letryourma The firm will produce?uritsofoutput because this is where price equials marginalcost number.) ltimedia Library Total revenue is s.(Enter your response as a whole number) hapter Resources Total cost is s.(Enter your response as a whole number) ynamic Study Mo The profit of the firm is sEnter your response as a whole number.) Communication To In the short run, the firm will In the long run, the firm will

Solution

Ans:

Table showing marginal cost

The profit maximizing level of output is where marginal revenue is equal to marginal cost.since the price is $60, the firm will produce four units of output.

1) The firm will produce 4 units of output and because this is where price equals marginal cost.

2) Total revenue = 4*$60

= $240  

3) Total cost = $15 + 4 * $60

= $15 + $240

= $255

4) Profit = Total revenue - Total cost

= $240 - $255

= -$15

5) Since revenue is less than cost, the firm will shit down in short run.

Q	TVC	MC
0	0	0
1	30	30
2	60	30
3	105	45
4	165	60
5	255	90
6	375	120