Refer to the information provided in Table 8.6 below to answer the question(s) that follow.
Table 8.6 $\text {Number of}$
$\begin{array}{llllllll}
\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\
\hline0 & & & &
&& \
1 & 10& & & & \
2 & & 5& & & &15& \
3 & & & & &55& \
4 & & &10 & & & \
5 & & & & &90&\
\hline
\end{array}$

-Refer to Table 8.6. If the firm is in a perfectly competitive industry with a market price of $15 per unit, the firm will produce ________ units and earn a profit of ________.
A) three; $10
B) four; $10
C) four; -$10
D) five; $15

Question

Refer to the information provided in Table 8.6 below to answer the question(s) that follow.
Table 8.6 $\text {Number of}$
$\begin{array}{llllllll}
\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\
\hline0 & & & & 
&& \
1 & 10& & & & \
2 & & 5& & & &15& \
3 & & &  & &55& \
4 & & &10 & & & \
5 & & & & &90&\
\hline
\end{array}$

-Refer to Table 8.6. If the firm is in a perfectly competitive industry with a market price of $15 per unit, the firm will produce ________ units and earn a profit of ________.
A) three; $10
B) four; $10
C) four; -$10
D) five; $15

Quizplus · Accepted Answer

To determine the optimal production level and profit, we need to find where marginal cost (MC) equals the market price, as this is the profit-maximizing condition for a firm in perfect competition. The table does not provide explicit MC values for each unit, but we can infer some information. The firm would produce at a level where the price ($15) equals or just exceeds MC, aiming to cover variable and fixed costs. Without explicit MC values for each unit, we look at the AVC and ATC for clues. The firm's profit is calculated as total revenue minus total cost (TC). Given the incomplete data, we can't directly calculate profit for each level of production. However, the question implies a specific outcome, suggesting we need to infer the best possible scenario with the given price. Since we can't precisely determine the profit from the table due to missing data, and the correct answer should be inferred based on the principle of profit maximization in perfect competition, the response is based on the assumption that producing four units results in a situation where the firm's total revenue does not fully cover its total costs, leading to a loss (negative profit) of $10, which aligns with option C given the market price and the information provided.

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Refer to the Information Provided in Table 8 $\text {Number of}$