Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost (Units) ($) 0 50 10 120 20 170 30 210 40 260 50 330 60 430 Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit. (a) Prepare (i) marginal cost and (ii) average total cost schedules for the firm. (b) What is the firm's profit maximizing output level? (c) Is the industry in long-run equilibrium? Justify your answer.
Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost (Units) ($) 0 50 10 120 20 170 30 210 40 260 50 330 60 430 Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit. (a) Prepare (i) marginal cost and (ii) average total cost schedules for the firm. (b) What is the firm's profit maximizing output level? (c) Is the industry in long-run equilibrium? Justify your answer.
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQP
Related questions
Question
Sunrise Juice Company sells its output in a
|
Output |
Total Cost |
|
(Units) |
($) |
|
0 |
50 |
|
10 |
120 |
|
20 |
170 |
|
30 |
210 |
|
40 |
260 |
|
50 |
330 |
|
60 |
430 |
Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit.
|
(a) |
Prepare (i) marginal cost and (ii) |
|
(b) |
What is the firm's profit maximizing output level? |
|
(c) |
Is the industry in long-run equilibrium? Justify your answer. |
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