The table given below shows the total revenue and total cost of a firm at different levels of output. Table 23.2
What is the equilibrium price for the perfectly competitive firm described in Table 23.2?

Question

The table given below shows the total revenue and total cost of a firm at different levels of output. Table 23.2
 What is the equilibrium price for the perfectly competitive firm described in Table 23.2?

Quizplus · Accepted Answer

The equilibrium price for a perfectly competitive firm is where marginal cost equals marginal revenue. Looking at the table, we can calculate the marginal cost for each level of output by finding the change in total cost over the change in output. For example, when output increases from 4 to 5, total cost increases from $17 to $22, so marginal cost is $5. Similarly, we can calculate the marginal revenue by finding the change in total revenue over the change in output. For example, when output increases from 4 to 5, total revenue increases from $18 to $22, so marginal revenue is $4.
 
We can see that at an output of 4 units, the marginal cost is equal to the marginal revenue, which is $4. Therefore, the equilibrium price for the perfectly competitive firm described in Table 23.2 is $4.

The Table Given Below Shows the Total Revenue and Total