Description
Below are 4 perfect competition firms who want to max their profits. Each row represents a separate firm. You have been hired as a consultant to assist them in doing so. Please advise them as to what decisions they should make to accomplish this by using the rules of marginal analysis for PC firms. See above for the due date for this assignment. Each row is worth 25 points for a total assignment value of 100 points.
1. Should the firm increase or decrease output, or leave output unchanged? How do you know?
2. Can the firm make a profit, earn a normal profit, minimize a loss, or should the firm shutdown? How do you know?
3. What happens to price if output changes?
Be sure to state reasons for your recommendations.
PC firms
Price Q TR TC P/L TVC ATC AVC MC
4 100 400 350 +50 300 3.5 3 5
10 20 200 500 -300 300 25 15 10
50 100 5000 5100 -100 3000 51 30 90
25 100 2500 2500 0 2000 25 20 25
Explanation & Answer
Here you go! Let me know if you need any edits. Thank you
Application of the rules of marginal analysis.
Student’s Name
Institution
Date
Application of the rules of marginal analysis.
Price Q
TR
TC
P/L
ATC AVC MC
4
400
350
+50
300
100
3.5
5
This firm is facing a price which is lower than its MC, thus it is losing money on
some of the...
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