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Find the Output Level and Product Price

At a product price of $56, will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit-maximizing or loss minimizing output? Explain. What economic profit or loss will the firm realize per unit of output?

Total Average Average Average Marginal
Product Fixed Cost Variable Cost Total Cost Cost
0
1 $60.00 $45.00 $105.00 $45
2 30.00 42.50 72.50 40
3 20.00 40.00 60.00 35
4 15.00 37.50 52.50 30
5 12.00 37.00 49.00 35
6 10.00 37.50 47.50 40
7 8.57 38.57 47.14 45
8 7.50 40.63 48.13 55
9 6.67 43.33 50.00 65
10 6.00 46.50 52.50 75

Solution Preview

When the market is competitive, the marginal revenue is equal to the price.

The first order condition for the firm to maximize its ...

Solution Summary

In this posting, the marginal revenue is assessed. It discusses production level and marginal cost, and what the profit or loss of the company is.

$2.19