Answer to Question #157259 in Economics for Iqra

Question

A perfectly  competitive firm has the following  total cost function.

Total Output     Total Cost

     0              20

     1              30

     2              42

     3              55

     4              69

     5              84

     6              100

     7              117

How much will the firm produce  if the price  of the production  the market  is Rs. 14 per unit? How will it change  its output  if price  if rises  to Rs. 16 per uni5?

Answer 1

Let's calculate the marginal cost per unit:

$$MC=\dfrac{\Delta TC}{\Delta Q}.$$

After calculations we get the next table:

As we can see from the table, if the price of the production the market is Rs 14 per unit, the firm will produce 4 units. If the price is rises to Rs 16 per unit, the firm will produce 6 units.

Answer:

a) Q=4

b) Q=6