Table 2 below show the unit prices and quantities of hats produced by a firm Study it and answer the questions that follows Quantity Unit Price (S) Total Re...

Answer Details

a)

U = 120/3 = 40

V = 4000 - 60*40 = 1600

W = 100*40 = 4000

X = 150

Y = 80

b) The firm is operating in a monopolistic competition market, where there are many sellers producing similar but not identical products, and each firm has a certain degree of market power to influence the price of its product.

c) In equilibrium, the firm's marginal cost should equal its marginal revenue. From the table, we can see that the marginal revenue is equal to $60 at two levels of output: 30 units and 60 units. Therefore, the firm will be in equilibrium at either 30 units or 60 units of output.

d) Total cost = $600, so average cost per unit = $600/50 = $12. The unit price is $80, so the profit per unit is $80 - $12 = $68. Therefore, the total profit is $68*50 = $3400.

e) Marginal cost is also known as the cost of producing one additional unit of output. It is the increase in total cost that arises from producing one more unit of output. In other words, it is the cost of the last unit produced.