Answer
a) 200 dollars
b) 10 dollars
c) 6 dollars
d) Less than 100 units
Work Step by Step
a) In a competitive market, the price is the same as the marginal revenue, and the price is also the same as the average revenue. The average revenue is 10 dollars, so the price is also 10 dollars.
100 units are sold, so the total revenue is 1,000 dollars. 100 units were produced, and the average total cost per unit was 8 dollars (for a total cost of 800 dollars). $1000-800=200$
b)
In a competitive market, the marginal cost is the same as the marginal revenue.
c)
Total costs = fixed costs + variable costs
$800 = 200 +x$
$600 = x$
We have 600 dollars in variable costs (for 100 units). Thus, each unit incurs 6 dollars in variable costs.
d) The efficient scale of production happens when the average cost and the marginal cost are the same. The marginal cost is 10 dollars, which is greater than the average total cost of 8 dollars. Thus, the efficient scale of the firm is less than 100 units.
