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.

1 Answer

  • 7 years ago
    Favorite Answer

    (a) profit level係唔係即係profit?


    Profit level



    (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]



    (c) Variable cost



    (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.

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