Table 9-3 Arnie Sells Basketballs in a Perfectly Competitive Market

question 55

Multiple Choice

Table 9-3
$\begin{array}{|c|c|c|c|}\hline \text { Quantity } & \text { Total Cost } & \begin{array}{c}\text { Average } \\\text { Total Cost }\end{array} & \begin{array}{c}\text { Marginal } \\\text { Cost }\end{array} \\\hline 0 & \$ 10.00 & \cdots & \cdots \\\hline 1 & 15.00 & \$ 15.00 & \$ 5.00 \\\hline 2 & 17.50 & 8.75 & 2.50 \\\hline 3 & 22.50 & 7.50 & 5.00 \\\hline 4 & 30.00 & 7.50 & 7.50 \\\hline 5 & 40.00 & 8.00 & 10.00 \\\hline 6 & 52.50 & 8.75 & 12.50 \\\hline 7 & 67.50 & 9.64 & 15.00 \\\hline 8 & 85.00 & 10.63 & 17.50 \\\hline 9 & 105.00 & 11.67 & 20.00 \\\hline\end{array}$ Arnie sells basketballs in a perfectly competitive market. Table 9-3 summarizes Arnie's output per day (Q) , total cost (TC) , average total cost (ATC) and marginal cost (MC) .
-Refer to Table 9-3.What price (P) will Arnie charge and how much profit will he earn if the market price of basketballs is $12.50?

• A) Price and profit cannot be determined from the information given.
• B) P = $12.50; profit = $52.50
• C) P = $12.50; profit = $22.50
• D) P = $20; profit = $75.00.

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Definitions:

Nonexcludable Good

A good that cannot be withheld from individuals once it has been provided, leading to free-riding issues.

National Defense

The protective measures and military actions that a country undertakes to defend itself against threats and maintain national security.

Market Failure

Occurs when the allocation of goods and services by a free market is not efficient.

Free-rider Problem

A situation in public economics where individuals consume a good without paying for it, leading to underproduction or depletion of the good, as seen often in public goods and common resources.