Table 9-4
$\begin{array}{|c|c|c|c|}
\hline \text { Quantity } & \begin{array}{c}
\text { Average } \
\text { Fixed Cost }
\end{array} & \begin{array}{c}
\text { Average } \
\text { Variable Cost }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 20 & \$ 40 & \$ 18 & \$ 18 \
\hline 40 & 20 & 14 & 10 \
\hline 60 & 13.1 & 16 & 20 \
\hline 80 & 10 & 22 & 40 \
\hline 100 & 8 & 30 & 62 \
\hline 120 & 6.61 & 40 & 90 \
\hline
\end{array}$ Table 9-4 shows the short-run cost data of a perfectly competitive firm. Assume that output can only be increased in batches of 20 units.
-Refer to Table 9-4.If the market price is $45,the firm

Question

Table 9-4
 $\begin{array}{|c|c|c|c|}
\hline \text { Quantity } & \begin{array}{c}
\text { Average } \
\text { Fixed Cost }
\end{array} & \begin{array}{c}
\text { Average } \
\text { Variable Cost }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 20 & \$ 40 & \$ 18 & \$ 18 \
\hline 40 & 20 & 14 & 10 \
\hline 60 & 13.1 & 16 & 20 \
\hline 80 & 10 & 22 & 40 \
\hline 100 & 8 & 30 & 62 \
\hline 120 & 6.61 & 40 & 90 \
\hline
\end{array}$ Table 9-4 shows the short-run cost data of a perfectly competitive firm. Assume that output can only be increased in batches of 20 units.
-Refer to Table 9-4.If the market price is $45,the firm

Quizplus · Accepted Answer

The firm will produce where marginal cost equals market price. At 80 units, the price ($45) is greater than average total cost (sum of average fixed cost and average variable cost, $32), resulting in a profit. Total profit = (Price - Average Total Cost) x Quantity = ($45 - $32) x 80 = $1,040.

Table 9-4 Table 9-4 Shows the Short-Run Cost Data of a Perfectly