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 Revenue (S) |
Marginal Revenue (S) |
Average Revenue (S) |
| 10 |
180 |
1800 |
- |
180 |
| 20 |
150 |
3000 |
120 |
X |
| 30 |
U |
3600 |
60 |
120 |
| 40 |
100 |
V |
W |
Y |
| 50 |
80 |
4000 |
0 |
80 |
| 60 |
60 |
3600 |
40 |
60 |
a) Compute the values of U, V, W, X and Y
b) In what type of market is the firm operating? Explain your answer
c) If the firm's marginal cost is $60.00 at all levels of output, at what level of output will it be in equilibrium? Explain your answer
d) If a total cos of $600,00 is incurred when 50 units of hats are produced. Determine the margin of profit or loss made.
e) What is another name for marginal cost?
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.
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.