Anonymous
Anonymous asked in 商業及金融其他 - 商業及金融 · 7 years ago

# Econ profit and cost問題

A profit maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of \$10, average total cost of \$8, and fixed costs of \$200.

a. Calculate profit level

b. Calculate marginal cost

c. Calculate average variable cost

d. Is the efficient scale of the firm more than, less than or exactly 100 units?Explain.

Rating
• 7 years ago

(a) profit level係唔係即係profit？

如果係既話，

Profit level

=\$100(10-8)

=\$200

(b) Marginal cost (MC)

=Total cost of producing 101 units - Total cost of producing 100 units

[=Total cost of producing (n+1) units - Total cost of producing n units]

=\$[(8x101+200)-(8x100+200)]

=\$8

(c) Variable cost

=\$(8x100-200)

=\$600

(d) In a competitive market, average revenue(AR)=marginal revenue (MR)

In this case, MR=AR=\$10, MC=\$8

Since MR>MC, the firm can increase its profit by increasing the output.

Therefore, the efficient scale of the firm is more than 100 units.