Calculate profit at the present level of output

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Reference no: EM132207569

Question: A firm in a perfectly competitive market, in the short run, faces a price of Â£20 per unit of its output. It employs 40 workers and produces 200 units per week. The last unit of output takes 32% of one worker's week to produce. The wage rate is Â£50 per week and fixed costs (per week) are Â£1,000.

a) Calculate MC, ATC, and profit at the present level of output.

b) Is the firm maximizing its profit?

c) Suppose that the price falls to Â£16 and fixed costs rise to 1,500. Should the firm close down?

Reference no: EM132207569

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