<p>Welcome to Economics SE. We ask that when asking about homework questions that you show your work so we can see what you need help with. The site is not meant to be a free homework solving machine.</p>

<p>Remember that a firm's profit is revenue minus costs, where costs can be fixed (200) or variable (manipulation of the marginal costs).</p>

<p>$$\Pi(q) = pq - c_f - c(q)$$</p>

<p>where $p$ is price, $c_f$ is fixed costs, and $c(q)$ is the cost with respect to $q$. We don't necessarily need to expression the variable costs as a function in this case.</p>

<p>So using the information we have, we know that for producing one unit of the good, our profits are:</p>

<p>$$\Pi(1) = 300 \cdot 1 - 200 - 270 = -170$$</p>

<p>For two goods, we have</p>

<p>$$\Pi(2) = 300 \cdot 2 - 200 - (270+210) = -80$$</p>

<p>And so on...</p>

<p>So you do this calculation for all the quantities and you see which one maximizes profits. That will also allow you to answer part b. As for part c, you have to see if there is a way for profits to be above 0 for some quantity produced.</p>

CC BY-SA 3.0
2015-10-23T12:58:30.803Z
Appreciate totally the effort, so I upvoted but I think giving answers to homework questions without efforts give incentive to other people to ask more homework questions :)
optimal control
CC BY-SA 3.0
2015-10-23T15:08:13.290Z
Well, hopefully it didn't give away the entire answer. Without knowing what someone is stuck on, it is admittedly hard to give help without doing that though. Your point is fair enough.
Kitsune Cavalry
CC BY-SA 3.0
2015-10-23T04:52:10.070Z
2015-10-23T04:52:10.070Z
Kitsune Cavalry
<p>The table below shows the marginal cost of production for a firm that is in an industry that is perfect competition. The market price of the product is $300. Use this information to answer the questions below.</p>
<p><span class="math-container">$$quantity \quad marginal \ cost$$</span>
<span class="math-container">$$1 \quad 270$$</span>
<span class="math-container">$$2 \quad 210$$</span>
<span class="math-container">$$3 \quad 180$$</span>
<span class="math-container">$$4 \quad 240$$</span>
<span class="math-container">$$5 \quad 285$$</span>
<span class="math-container">$$6 \quad 315$$</span>
<span class="math-container">$$7 \quad 345$$</span>
<span class="math-container">$$8 \quad 375$$</span></p>
<blockquote>
<p>Suppose the firm’s total fixed costs are $200.</p>
<p>a. What quantity does the firm produce in the short run to maximize profits?</p>
<p>b. What are the firm’s profits in the short run?</p>
<p>c. Does the firm stay in business in the long run? Why?</p>
</blockquote>

<macroeconomics>
Perfect Competition and costs of production question
Macrooonoway
# Perfect Competition and costs of production question

(Asked by: username_0 on 2015-10-23)

The table below shows the marginal cost of production for a firm that is in an industry that is perfect competition. The market price of the product is $300. Use this information to answer the questions below.

$$quantity \quad marginal \ cost$$
$$1 \quad 270$$
$$2 \quad 210$$
$$3 \quad 180$$
$$4 \quad 240$$
$$5 \quad 285$$
$$6 \quad 315$$
$$7 \quad 345$$
$$8 \quad 375$$

> Suppose the firm’s total fixed costs are $200.
>
> a. What quantity does the firm produce in the short run to maximize profits?
>
> b. What are the firm’s profits in the short run?
>
> c. Does the firm stay in business in the long run? Why?

**Tags:** macroeconomics

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## 1 answers

### Answer by username_1 on 2015-10-23. Score: 2

Welcome to Economics SE. We ask that when asking about homework questions that you show your work so we can see what you need help with. The site is not meant to be a free homework solving machine.

Remember that a firm's profit is revenue minus costs, where costs can be fixed (200) or variable (manipulation of the marginal costs).

$$\Pi(q) = pq - c\_f - c(q)$$

where $p$ is price, $c\_f$ is fixed costs, and $c(q)$ is the cost with respect to $q$. We don't necessarily need to expression the variable costs as a function in this case.

So using the information we have, we know that for producing one unit of the good, our profits are:

$$\Pi(1) = 300 \cdot 1 - 200 - 270 = -170$$

For two goods, we have

$$\Pi(2) = 300 \cdot 2 - 200 - (270+210) = -80$$

And so on...

So you do this calculation for all the quantities and you see which one maximizes profits. That will also allow you to answer part b. As for part c, you have to see if there is a way for profits to be above 0 for some quantity produced.

> **Comments:**
> **username_2**: Appreciate totally the effort, so I upvoted but I think giving answers to homework questions without efforts give incentive to other people to ask more homework questions :)  
> **username_1**: Well, hopefully it didn't give away the entire answer. Without knowing what someone is stuck on, it is admittedly hard to give help without doing that though. Your point is fair enough.  

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