To determine how many units of output the firm should supply, we need to compare the market price with the marginal cost (MC) of each additional unit of output. The marginal cost is the increase in total cost (TC) that results from producing one more unit of output. It can be calculated as the change in total cost divided by the change in quantity.

First, we need to calculate the total cost (TC) for each output level, which is the sum of fixed costs (FC) and variable costs (VC).

Output (q) FC ($) VC ($) TC ($)
0 10 0 10
1 10 2 12
2 10 6 16
3 10 10 20
4 10 15 25
5 10 21 31
6 10 30 40
7 10 40 50

Next, we calculate the marginal cost (MC) for each additional unit of output.

Output (q) TC ($) MC ($)
0 10 -
1 12 2
2 16 4
3 20 4
4 25 5
5 31 6
6 40 9
7 50 10

The firm should continue to produce as long as the market price is greater than or equal to the marginal cost. Given a market price of $9, the firm should produce 6 units of output. At this output level, the marginal cost of producing an additional unit would be $9, which is equal to the market price. Producing more than 6 units would result in a marginal cost greater than the market price, which would not be profitable for the firm.

Question

To determine how many units of output the firm should supply, we need to compare the market price with the marginal cost (MC) of each additional unit of output. The marginal cost is the increase in total cost (TC) that results from producing one more unit of output. It can be calculated as the change in total cost divided by the change in quantity.

First, we need to calculate the total cost (TC) for each output level, which is the sum of fixed costs (FC) and variable costs (VC).

Output (q)	FC ($)	VC ($)	TC ($)
0	10	0	10
1	10	2	12
2	10	6	16
3	10	10	20
4	10	15	25
5	10	21	31
6	10	30	40
7	10	40	50

Next, we calculate the marginal cost (MC) for each additional unit of output.

Output (q)	TC ($)	MC ($)
0	10	-
1	12	2
2	16	4
3	20	4
4	25	5
5	31	6
6	40	9
7	50	10

The firm should continue to produce as long as the market price is greater than or equal to the marginal cost. Given a market price of $9, the firm should produce 6 units of output. At this output level, the marginal cost of producing an additional unit would be $9, which is equal to the market price. Producing more than 6 units would result in a marginal cost greater than the market price, which would not be profitable for the firm.

Knowee AI · Accepted Answer

To determine how many units of output the firm should supply, we need to compare the market price with the marginal cost (MC) of each additional unit of output. The marginal cost is the increase in total cost (TC) that results from producing one more unit of output. It can be calculated as the change in total cost divided by the change in quantity.

First, we need to calculate the total cost (TC) for each output level, which is the sum of fixed costs (FC) and variable costs (VC).

Output (q)	FC ($)	VC ($)	TC ($)
0	10	0	10
1	10	2	12
2	10	6	16
3	10	10	20
4	10	15	25
5	10	21	31
6	10	30	40
7	10	40	50

Next, we calculate the marginal cost (MC) for each additional unit of output.

Output (q)	TC ($)	MC ($)
0	10	-
1	12	2
2	16	4
3	20	4
4	25	5
5	31	6
6	40	9
7	50	10

The firm should continue to produce as long as the market price is greater than or equal to the marginal cost. Given a market price of $9, the firm should produce 6 units of output. At this output level, the marginal cost of producing an additional unit would be $9, which is equal to the market price. Producing more than 6 units would result in a marginal cost greater than the market price, which would not be profitable for the firm.

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