"Below is the cost function for a business producing overhead projectors:
Quantity of OHPs
0, 1, 2, 3, 4, 5
Total Cost (£)
60, 260, 480, 720, 980, 1260
Marginal Cost (£)
-, 200, 220, 240, 260, 280
a. Fill in the missing marginal cost values. "
Which I have answered but not 100% sure it's correct.. However, the following questions are:
b. Assume the business is operating under conditions of perfect competition. If the market price is £280 per OHP, how many OHPs would the firm produce? What is the total profit of the business? [2 marks]
I THINK it's 5 but I'm not too sure?
c.In the long term will the price remain at £280? Explain your reasoning, and if the price changes explain the process that causes that price to change. Graphically illustrate the process [3 marks]
d. If there are no changes to costs or industry demand what will be the price and firm output in the long run equilibrium. [2 marks]
e.What is the profit in perfect competition in the long run and why is this not the case with monopoly? [2 marks]