Case D: Apex Company. 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 10Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250Answer the following questions: 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?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?Comment on your answers to parts (1) and (2).

Shutdown point refers to a level of production at which a firm starts to incur heavy losses such…

Answered: Case D: Apex Company. Apex is a…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 2.4P

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Case D: Apex Company.

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:

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?
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?
Comment on your answers to parts (1) and (2).

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