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Imagine that you are a price-taking firm with the following total cost schedule
Imagine that you are a price-taking firm with the following total cost schedule.
Quantity: 1, 2, 3, 4, 5, 6, 7, 8, 9
Total Cost: 12, 20, 24, 28, 34, 42, 52, 64, 78
Assume that if this firm produces zero they have a total cost of zero. There is no fixed cost. Fill in the following supply schedule.
Price Quantity Supplied
4 ?
6 ?
8 ?
10 ?
12 ?
14 ?
Expert Solution
In perfectly competitive market, the demand curve is a horizontal straight line equal to price.
When P<AVC then the firm will not supply anything in short run.
When P<AVC then QS = 0
When P>AVC the the firm will supply in short run.
So, when the price is 8 then QS = 6 units
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