Quiz4Answers

Quiz4Answers - instead of 10. 2. Suppose a firm in a...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 20A Winter 2008 Answers to Quiz #4 Please answer both questions. Be sure to explain your answers. Good luck! 1. A firm’s average total cost at output 10 is $12 per unit. Its average total cost at output 11 is $13 per unit. Give the lowest price per unit at which the firm would want to increase output from 10 to 11. ANSWER: Total cost at output 10 is 10*12=$120. Total cost at output 11 is 11*13=$143. Marginal cost is thus $143-$120=$23. So at any price greater than $23 the firm would increase profits by producing 11
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: instead of 10. 2. Suppose a firm in a competitive market received $1,000 in total revenue and had a marginal cost of 10 for the last unit produced and sold. How many units were sold? ANSWER: The firm will produce that quantity where marginal cost equals price. The price must therefore be $10. Output is therefore 1,000/10=100....
View Full Document

Ask a homework question - tutors are online