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

(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.