# 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.

### 1 Answer

- 7 years agoFavorite Answer
(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.