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An industry currently has 100 firms, each of which has fixed costs of $16 and average variable costs as follows a. Compute a firm’s marginal cost and average total cost for each quantity from 1 to 6. b. The equilibrium price is currently $10. How much does each firm produce? What is the total quantity supplied in the market?

Respuesta :

Marginal cost when:

output is 1 unit : -

output is 2 units is 3

output is 3 units is 5

output is 4 units is 7

output is 5 units is 9

output is 6 units is 11.

Average total cost when:

output is 1 unit is $17

output is 2 units is $10

output is 3 units is $8.33

output is 4 units is $8

output is 5 units is $8.20

output is 6 units is $8.67

When equilibrium price is $10, number of quantity produced is 4 units. The total quantity supplied is 400.

What is the marginal cost?

The marginal cost is the change in total cost. Total cost is sum of total variable cost and total fixed cost.

Variable cost when :

1 unit of output is produced: 1 x 1 = 1

2 unit of output is produced: 2 x 2 = 4

3 unit of output is produced: 3 x 3 = 4

4 unit of output is produced: 4 x 4 = 16

5 unit of output is produced: 5 x 5 = 25

6 unit of output is produced: 6 x 6 = 36

Total cost when :

output is 1 unit : 16 + 1 = 17

output is 2 units : 16 + 4 = 20

output is 3 units : 16 + 9 = 25

output is 4 units : 16 + 16 = 32

output is 5 units : 16 + 25 = 41

output is 6 units : 16 + 36 = 52

Marginal cost when:

output is 1 unit : -

output is 2 units : 20 - 17 = 3

output is 3 units : 25 - 20 = 5

output is 4 units : 32 - 25 = 7

output is 5 units : 41 -- 32 = 9

output is 6 units : 52 - 41 = 11

Average total cost when:

output is 1 unit : 17 / 1 = 17

output is 2 units : 20 / 2 = 10

output is 3 units : 25/3 = $8.33

output is 4 units : 32 / 4 = $8

output is 5 units : 41 / 5 = $8.20

output is 6 units : 52 / 6 = $8.67

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