Consider the Following Total Cost Schedule for a Perfectly Competitive

question 112

Multiple Choice

Consider the following total cost schedule for a perfectly competitive firm producing ball- point pens. $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Output } \\\text { per period }\end{array} & \text { TVC } ( \$ ) & \text { TFC } ( \$ ) \\\hline 0 & 0 & 5 \\\hline 10 & 2 & 5 \\\hline 20 & 3 & 5 \\\hline 30 & 6 & 5 \\\hline 40 & 10 & 5 \\\hline 50 & 15 & 5 \\\hline\end{array}\\\text { TABLE 9- } 3\end{array}$$
-Refer to Table 9- 3. Suppose the prevailing market price for this firm's product is $0.40. The profit- maximizing level of output for this firm is between

• A) 10 and 20 units.
• B) 0 and 10 units.
• C) 20 and 30 units.
• D) 30 and 40 units.
• E) 40 and 50 units.

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Definitions:

Variable

A characteristic, number, or quantity that can be measured or quantified and can vary among individuals or over time.

Least Squares Line

A straight line that minimizes the sum of the squared differences between the observed values and the values predicted by the line.

Sales

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