Question Two:The following data for a small farm operating in a perfectly competitive marketare given in the table below. The price is $10 per yogurt.QTC100102002028030330403605038060390704258050090610100750Instructions:1. What is the firm's decision at that price? (whether to produce or toshutdown), justify your answer.2. Show the range of output at which the firm experience IMR and DMR.3. Using excel, now suppose the price of strawberry yoghurt decreases to$5.5 per unit, what is the right decision firm should take, (produce orshutdown) justify your answer. Quantity TRTCTR-TC0100-10010100200-100YOU CAN FIND THE20200280-80SOLUTION OF PART (1)30300330-30FROM THIS ANSWER:40400360405050038012060600390210707004252758080050030090900610290100100750-650The optimal level of output is determined at that point where the difference between TR andTC is maximum. It is at 80 units of quantity where the difference between TR and TC ismaximum which is shown in the above table.Profit=TR-TC=800-500=300Hence at an optimal level of quantity that is 80 units the profit is $300.

The total production process of a firm is an amalgamation of various costs, the optimum quantity…

The following data for a small farm operating in a perfectly competitive market are given in the table below. The price is $10 per yogurt. Q TC 100 10 200 20 280 30 330 40 360 50 380 60 390 70 425 80 500 90 610 100 750 Instructions: 1. What is the firm's decision at that price? (whether to produce or to shutdown), justify your answer. 2. Show the range of output at which the firm experience IMR and DMR. 3. Using excel, now suppose the price of strawberry yoghurt decreases to $5.5 per unit, what is the right decision firm should take, (produce or shutdown) justify your answer.

The following data for a small farm operating in a perfectly competitive market are given in the table below. The price is $10 per yogurt. Q TC 100 10 200 20 280 30 330 40 360 50 380 60 390 70 425 80 500 90 610 100 750 Instructions: 1. What is the firm's decision at that price? (whether to produce or to shutdown), justify your answer. 2. Show the range of output at which the firm experience IMR and DMR. 3. Using excel, now suppose the price of strawberry yoghurt decreases to $5.5 per unit, what is the right decision firm should take, (produce or shutdown) justify your answer.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 1SCQ: Firms ill a perfectly competitive market are said to be price takers that is, once the market...

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