Name: _______________________________
Take home FRQ Directions: Complete each FRQ on a separate piece of paper. Each FRQ should
be neatly answered in order of the question.
FRQ #1 (10 pts)
FRQ # 2 (8 pts): Complete the following chart for a perfectly competitive firm selling its product at a price of
$30, and then answer the questions:
Output
Total
Revenue
Marginal
Revenue
Variable
Cost
0
0
-
0
1
30
2
50
3
60
4
70
5
85
6
105
7
130
8
170
Fixed Cost
Total Cost
Marginal
Cost
10
-
a. What is the AVC when producing five units out output?
b. To maximize profits or minimize losses, what output should this firm produce? Explain how you got
your answer?
c. Using your answer from (b), what is the profit or loss per unit at the profit maximizing output?