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 1250 Answer the following questions: What is the profit-maximizing level of output? Calculate Apex’s profit. 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 (2) and (3).

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Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 4PA

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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:

What is the profit-maximizing level of output? Calculate Apex’s profit.
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 (2) and (3).

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