Cost figures for a hypothetical firm are given in the following table. Use them for the exercises below. The firm is selling in a perfectly competitive market.OutputFixedAFCVariable AVCTotalATCMC Cost Cost cost 1$50 50/1=50$3030/1=30 30+50=8080/1=80 NA2$50 50/2=25$5050/2=25 50+50=100100/2=50 (100-80)/(2-1)=203$50 50/3=16.67$8080/3=26.67 50+80=130130/3=43.33 (130-100)/(3-2)=304$50 50/4=12.50$120120/4=30 50+120=170170/4=42.50 (170-130)/(4-3)=405$50 50/5=10$170 170/5=3450+170=220 220/5=44 (220-170)/(5-4) =50 What can you expect from an industry in perfect competition in the long run? That is, what will the price be? What quantity will be produced? What will be the relation between marginal cost, average cost, and price?

Economic costs involve not just the accounting costs but also the opportunity cost of making one…

Answered: Cost figures for a hypothetical firm…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 7PA

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Cost figures for a hypothetical firm are given in the following table. Use them for the exercises below. The firm is selling in a perfectly competitive market.

Output	Fixed	AFC	Variable	AVC	Total	ATC	MC
	Cost		Cost		cost
1	$50	50/1=50	$30	30/1=30	30+50=80	80/1=80	NA
2	$50	50/2=25	$50	50/2=25	50+50=100	100/2=50	(100-80)/(2-1)=20
3	$50	50/3=16.67	$80	80/3=26.67	50+80=130	130/3=43.33	(130-100)/(3-2)=30
4	$50	50/4=12.50	$120	120/4=30	50+120=170	170/4=42.50	(170-130)/(4-3)=40
5	$50	50/5=10	$170	170/5=34	50+170=220	220/5=44	(220-170)/(5-4) =50

What can you expect from an industry in perfect competition in the long run? That is, what will the price be? What quantity will be produced? What will be the relation between marginal cost, average cost, and price?

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