PROBLEMS & EXERCISES

UNIT TWO (FOR EXAM TWO)
Unit Two: Assignment 3: Web Problem U2-A3-P1
Assume a perfectly competitive firm has a contract for the delivery of 1,000 big screen televisions for $1,000 each and that its ATC= $800. At the last minute, a special rush order is received for one more TV at a price of $1,600. It turns out that if your firm produces this extra TV then the ATC for the entire order (all 1001 televisions) will go up to $802. Should the firm fill the rush order? Why or why not? (Hint: set up a table which includes Q, TC, MC, TR, and MR.)
Total Revenue = P x QATC x Q = TC, since ATC is on a per unit basis
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