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

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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
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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....
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