Firm A Firm B Quantity Fixed Cost Total Marginal Quantity Average Variable Average Total Fixed Cost Total Marginal Cost Average Variable Average Variable Cost Variable Total Cost Cost Cost Cost Cost Cost 1 $20 $24 24 44 $20 $8 8 28 2 20 30 15 25 2 20 10 2 5 15 3 20 38 12.67 19.33 3 20 16 6. 5.33 13 4 20 48 10 12 17 4 20 24 6 11 5 20 62 14 12.40 16.40 20 36 12 7.20 11.20 6 20 82 20 13.67 17 6. 20 56 20 9.33 12.67 7 20 110 28 15.71 18.57 7 20 86 50 12.29 15.14 In the above table, you are given information about two firms that compete in a price-taker market. Assume that fixed costs for each firm are $20. A. Complete the table B. What is the lowest price at which firm A will produce ? $12 c. How many units of output will firm A produce at that price? D. What is the lowest price at which firm B will produce? $5 E. How many units of output will firm B produce at that price F. How many units ill Firm A produce if the market price is $20 G. How many units will firm B produce at the $20 price? 6 H. At the price of $20 which firm would earn a higher net profit or incur a smaller loss? I. How much is that net profit or loss?

Firm A Firm B Quantity Fixed Cost Total Marginal Quantity Average Variable Average Total Fixed Cost Total Marginal Cost Average Variable Average Variable Cost Variable Total Cost Cost Cost Cost Cost Cost 1 $20 $24 24 44 $20 $8 8 28 2 20 30 15 25 2 20 10 2 5 15 3 20 38 12.67 19.33 3 20 16 6. 5.33 13 4 20 48 10 12 17 4 20 24 6 11 5 20 62 14 12.40 16.40 20 36 12 7.20 11.20 6 20 82 20 13.67 17 6. 20 56 20 9.33 12.67 7 20 110 28 15.71 18.57 7 20 86 50 12.29 15.14 In the above table, you are given information about two firms that compete in a price-taker market. Assume that fixed costs for each firm are $20. A. Complete the table B. What is the lowest price at which firm A will produce ? $12 c. How many units of output will firm A produce at that price? D. What is the lowest price at which firm B will produce? $5 E. How many units of output will firm B produce at that price F. How many units ill Firm A produce if the market price is $20 G. How many units will firm B produce at the $20 price? 6 H. At the price of $20 which firm would earn a higher net profit or incur a smaller loss? I. How much is that net profit or loss?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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