CON 2302 Problem Set 3 Compatibility Mode References Mailing

CON 2302 Problem Set 3 -Compatibility Mode References Mailings Review View Help Tell me what you want to do AaBbCcl AaBbCcl AaBbCcl AaBbCcI AaBb . Heading 1 Heading 3 1 Normal 1 No Spac.. Headino Paragraph Styles B. Short Run Cost of Production Schedule Product X (Perfect Competition) OUTPUT TFC TVC AVC TC MC ATC 200 200 200 200 200 200 200 200 0. 175 300 500 800 1,200 1,700 2,300 SAMSUNG

Solution

The above table is calculated by using below formulas:

i. TC = TVC + TFC (basically add column 2 and 3)

ii. MC is the change in the total cost when output is changed by 1 unit. (i.e. calculate change in total cost when output changes by 1 unit)

iii. AVC = TVC/Q (divide column 3 by 1)

iv. ATC = TC/Q (divide column 7 by 1)

A. When p = 250, when can calculate profit = TR - TC, where TR = p*Q

B. Using the formula mentioned in the question, we get -

Profit is maximized when 3 units of output are produced.

C.

Profit is maximized when 2 units of output are produced.

Output	TFC	TVC	TC	MC	AVC	ATC
0	200	0	200
1	200	175	375	175	175	375
2	200	300	500	125	150	250
3	200	500	700	200	166.6667	233.3333
4	200	800	1000	300	200	250
5	200	1200	1400	400	240	280
6	200	1700	1900	500	283.3333	316.6667
7	200	2300	2500	600	328.5714	357.1429