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 rises to Rs. 16 per unit?

Answer 1

Total output TC MC

0 20 -

1 30 10

2 42 12

3 55 13

4 69 14

5 84 15

6 100 16

7 117 17

If p=14, Q=4

If p=16, Q=6