Question

Question 2 2/2 pts Assume the following cost and revenue data represent your perfectly competitive firm. In order to maximize profits in the short run, you should: Output Price Marginal Cost 2 3 4 5 $100 $100 $100 $100 $100 $100 $100 Total Fixed Costs $20 $20 $20 $20 $20 $20 $20 Total Variable Total Cost Costs $0 $20 $50 $70 $90 $110 $150 $170 $230 $250 $350 $370 $550 $570 na $50 $40 $60 $80 $120 $200 Shut down (i.e. produce zero units.) Produce 2 units. Produce 3 units. produce more than 3 units.

Answer 1

Solution-

Any firms will continue producing when it's price is greater than average cost to have positive profit.

Profit=(p-ac)× quantity.

Any firm will shut down at the point when price = average cost.

74 output | Total Cost(4) Ac= IC 1 Price 20 70 70 110 55 170 56.66 250 62.5 370 570 95. N T Tiu 6 units, Price > Average cost. So, in order to maximize profits he will continue producing yonis. So, by the options, the most feasible answer would be <dy Produce more than 3 units.