Marginal Analysis: Perfectly Competitive Firm

Important Problem related to TCO C,

How about if we try an EXAMPLE of MR=MC for a perfectly competitive firm?

(TCO C ) Answer the next question on the basis of the following information for a purely competitive firm:

Output------------Price------------Total Cost

----0--------------$100---------------$100
----1--------------$100---------------$260
----2--------------$100---------------$290
----3--------------$100---------------$350
----4--------------$100---------------$480
----5--------------$100---------------$700

How many units would the above profit-maximizing firm produce?

Solution Summary

This solution provides you with step by step explanation of how to calculate the profit maximizing output of a perfectly competitive firm. Note, an excel spreadsheet is attached to the solution with calculations.