Suppose that a monopolistically competitive firm must build a production facility in order to produce a product. The fixed cost of this facility is FC = $24. Also, the firm has constant marginal cost, MC = $3. Demand for the product that the firm produces is given by P = 27-3Q.
a) Fill in the table below. If any of your values have decimals, you may round to only one numeral after the decimal (nearest 10th of a dollar).
|
Quantity of Output
|
Price
|
Total Cost
|
Average Total Cost
|
Total Revenue
|
Profits
|
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1
|
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2
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3
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4
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5
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6
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7
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8
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9
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b) How much output will this firm produce if it maximizes profit?
c) What price should this firm charge if it wants to maximize profit?