Assumptions




Perfect Competition;
Increasing Marginal Cost;
Each row in the table below represents
a separate situation; and
Consider the following responses:
Number
1
2
3
4
5
6
P
10
Q
TR
TC
Firm
Firm
Firm
Firm
Firm
Firm
Response
now at correct output
should increase price
should decrease price
should increase output
should decrease output
should shutdown
TFC TVC ATC AVC
___ 900 ____ 500 ____
10
___ 400 ____ 100 ____
2
MC
___ ____
1
5
_____
20 ____ ____
0.3 0.25
_____
10 100 ____ ____ 200 ____ ____
10 ____
_____
10
30 ____
50 300 ____ ____ ____
7
1
Response
5
7
_____