Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 4MC
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05

(a)
(b)
Q 5.
(B)
Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total
cost function is given in the following schedule:
Output
(Units)
0
10
20
30
40
50
60
Total Cost
($)
50
120
170
210
260
330
430
Total costs include a "normal" return on the time (labor services) and capital that the owner
has invested in the firm. The prevailing market price is $7 per
unit.
Prepare (1) marginal cost and (ii) average total cost schedules for the firm.
What is the firm's profit maximizing output level?
Transcribed Image Text:(a) (b) Q 5. (B) Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output (Units) 0 10 20 30 40 50 60 Total Cost ($) 50 120 170 210 260 330 430 Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit. Prepare (1) marginal cost and (ii) average total cost schedules for the firm. What is the firm's profit maximizing output level?
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