Competitive Market

CHAPTER 9: COMPETITIVE MARKETS209Output TVC TFCTCMCATC0AVC01001004010020070100300120100400180100500250100600330100700420100800520100IIIIIIIIIIIIIIIIIIIIIIIP!900630100a. Complete the cost schedule for this firm by cal-culating TC, MC, ATC, and AVC. Remember torecord the MC figures between the rows of outputand total cost.b. Draw a scale diagram and plot ATC, AVC, andMC.c. Below which price should this firm choose to pro-duce zero output?d.

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If the market price per napkin is $0.80, what is thisfirm’s profit-maximizing level of output? Since MCis calculated between the rows of the output levelsgiven, state the range of output in which the profit-maximizing level of output will fall. Do the samefor market prices of $0.60 and $1.00.e. Calculate the firm’s profit per unit and total profitper day at an output level of 450 napkins per dayand at a market price of $0.70.

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