Question

Total cost schedule for a competitive firm:

Output	Total Cost
0	$ 10
1	60
2	80
3	110
4	165
5	245

If market price is $30, how many units of output will the firm produce?

a.         0, the firm shuts down

b.         1

c.         2

d.         3

e.         4

Answer 1

Output	Total Cost	Marginal Cost
0	$ 10
1	60	50
2	80	20
3	110	30
4	165	55
5	245	80

When the market price is $30,the firm will set P=MC for profit-maximization

So, the firm will produce 3 units

option(D)