A firm has short-run costs such that the lowest average variable cost it has for any quantity supplied greater than zero (i.e. for Qs > 0) is $10 a unit. The lowest average total cost (in the short-run) for any quantity supplied is $14 a unit. That is, $10 and $14 describe the height of the AVC curve and ATC curve at their respective minimums. Suppose the firm is in a perfectly competitive market. a. What is the marginal revenue of a unit at the market price of P? b. What is the average revenue at the market price of P?
A firm has short-run costs such that the lowest average variable cost it has for any quantity supplied greater than zero (i.e. for Qs > 0) is $10 a unit. The lowest average total cost (in the short-run) for any quantity supplied is $14 a unit. That is, $10 and $14 describe the height of the AVC curve and ATC curve at their respective minimums. Suppose the firm is in a perfectly competitive market. a. What is the marginal revenue of a unit at the market price of P? b. What is the average revenue at the market price of P?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section12.3: The Various Measures Of Cost
Problem 3QQ
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A competitive firm optimizes its output at the point where marginal revenue is equal to the marginal cost .
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