Problem
The table shows the total cost incurred by a firm in the short run. Assume that the price is fixed by the government at $250 per unit and the firm must sell only at this price regardless of output produced.
1. Construct a table and fill up the values of average variable cost, average total cost and marginal cost for all the outputs.
2. Determine the optimal quantity and calculate the total profit or loss of the firm at the optimal quantity.
|
Output
|
Total Cost ($)
|
|
0
|
120
|
|
1
|
300
|
|
2
|
400
|
|
3
|
480
|
|
4
|
600
|
|
5
|
800
|
|
6
|
1,200
|