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cowgiljl
Jun9-04, 05:40 PM
:confused: Suppose a firm in a perfectly competive industry is producing a output of 10 units. The firms total revenue at this output is $80 and its total cost is $30. The firms marginal cost associated with the 11 unit of a output is $12. What can i say about an increase in production should it produce 11 unit or no

this is what i have
output TC MC
10 $30 $3 per unit
11 $42 $12 per unit

profit is $50

@10 units = 30/10 = $3
@11 unit = 42/11 = $3.80

it should not increase production because the cost more per unit to make

did i go about this right?
thanks joe

AKG
Jun9-04, 11:07 PM
I'm not sure, but I think it would depend on the marginal revenue (if there is such a thing) associated with the 11th unit. And is profit/unit of real concern, or net profit? I would think it would be profit. Of course, if this is a homework question, it really depends on what your teacher expects and has taught you.