Question: The textbook presents the perfectly competitive model in a concise, perhaps too concise way. Reference is made to profit maximizing output and how that changes when demand or supply conditions change. The following assignment focuses on understanding the perfectly competitive firm’s short run production decisions. Recall the short run is a period where you cannot change at least one input –in other words you have some fixed costs. Imagine that the following table presents you with data on the costs of a typical firm. You are also told that the market price is $40. Use that information to figure out what price the perfectly competitive firm will receive for its output and complete the cost, revenue and profit columns in the following table.

Where Q=quantity, P=price, TR=total revenue, MR=marginal revenue, AR=average revenue, TC=total cost, TVC =total variable cost, TFC =total fixed cost, ATC = average total cost, AVC = average variable cost, AFC = average fixed cost and MC =marginal cost.

Should the firm operate or shut down? Explain.

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document