Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit. Quantity (units) 0 1 2 3 4 5 6 7 8 9 10 Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250 Answer the following questions: 1. What is the profit-maximizing level of output? Calculate Apex’s profit. 2. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? 3. If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?
Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit. Quantity (units) 0 1 2 3 4 5 6 7 8 9 10 Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250 Answer the following questions: 1. What is the profit-maximizing level of output? Calculate Apex’s profit. 2. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? 3. If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition
Section: Chapter Questions
Problem 6E
Related questions
Question
Apex is a
Quantity (units)
0
1
2
3
4
5
6
7
8
9
10
Total Variable Cost (TVC)
0
100
180
220
300
390
500
640
800
1000
1250
Answer the following questions:
1. What is the profit-maximizing level of output? Calculate Apex’s profit.
2. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?
3. If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?
4. Comment on your answers to parts (2) and (3).
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