Question 7:
You are given the following data about two firms:
FIRM A
Quantity 0 1 2 3 4 5 6
Total revenue ($) 0 10 20 30 40 50 60
Average revenue ($) ___ ___ ___ ___ ___ ___ ___
Marginal revenue ($) ___ ___ ___ ___ ___ ___
Total cost ($) 30 42 50 60 76 100 140
Marginal cost ($) ___ ___ ___ ___ ___ ___
Average cost ($) ? ___ ___ ___ ___ ___ ___
FIRM B
Quantity 0 1 2 3 4 5 6
Total cost ($) 100 134 154 177 216 266 366
Average cost ($) ? ___ ___ ___ ___ ___ ___
Marginal cost ($) ___ ___ ___ ___ ___ ___
Price ($) 140 130 120 110 100 90 80
Marginal revenue ($) ___ ___ ___ ___ ___ ___
Total revenue ($) ___ ___ ___ ___ ___ ___ ___
(a) Complete the two tables above. (4 marks)
(b) Are these firms operating in the short or the long run? (1 mark) Firm A: short run / long run
Firm B: short run / long run
(c) Are these firms operating under perfect or imperfect competition? Firm A: perfect / imperfect
(1 mark) Firm B: perfect / imperfect
(c) What level of output will these firms produce in the short run? Firm A:
(2 marks) Firm B:
(d) How would you describe their profit positions? (2 marks)
Firm A:
Firm B: