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Assume that a firm is a perfectly competitive industry has the following total cost schedule:
Outputs (units)
Total Cost ($)
10
$110
15
$150
20
$180
25
$225
30
$300
35
$385
40
$480
a. Calculate a marginal cost and average cost schedule for this firm.
b. If the prevailing market price is $17 per unit, how many units will be produced and sold? What are the profits per unit? What are total profits?
c. Is the industry in long-run equilibrium at this price?
If your payroll (budget) is increased to $120,000, what should you do to maximize the number of customers served?
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