Question

The table shows the costs that a firm faces when producing corn in a perfectly competitive market. Use it to answer the following questions. Show your work. Quantity (bushels) 0 1 2 3 4 5 6 7 9 8 10 Total Cost (dollars) | 36 46 54 60 64 | 65 | 69 | 77 | 92 | 117 | 160 Does this table describe the short run situation or the long run situation for the firm? How can you tell? (6 points)

Answer 1

Q	TC	ATC=TC/Q
0	36	-
1	46	46
2	54	27
3	60	20
4	64	16
5	65	13
6	69	11.5
7	77	11
8	92	11.5
9	117	13
10	160	16

Because average cost firstly falls ,then reach at minimum and then increases, this implies that this is the short run situation for the firm because in the long run the average cost is the minimum of each short run average cost .