A purely competitive firm finds that the market price for its product is $30.00. It has a fixed cost of $100.00 and a variable cost of $17.50 per unit for the first 50 units and then $37.50 per unit for all successive units.
Instructions: Round your answers to 2 decimal places.
a. Does price equal or exceed average variable cost for the first 50 units? .
What is the average variable cost for the first 50 units? $.
b. Does price equal or exceed average variable cost for the first 100 units? .
What is the average variable cost for the first 100 units? $.
c. What is the marginal cost per unit for the first 50 units? $ per unit.
What is the marginal cost for units 51 and higher? $ per unit.
d. For each of the first 50 units, does MR exceed MC? .
What about for units 51 and higher? .
e. What output level will yield the largest possible profit for this purely competitive firm? ____ units.