Answer to Question #106995 in Microeconomics for Teejay

Question

A Perfectly Competitive firm Produces 50 units of Output , at equilibrium, in the short run. the total cost borne by the firm is $300 and revenue is $2 therefore the firm:
a ) is just breaking even
b) Is experiencing dis-economies of scale
c) is earning positive profits
d) is facing a positively sloped demand curve
e) is suffering loses

Answer 1

Workings

Units – 50

Total cost - $300

Revenue/unit - $2

Total revenue = Number of units * unit price = 50*2= $100

Profit/Loss = Total revenue – Total cost = $100 - $300= - $200

Loss= -$200

Answer: e) the firm is suffering losses