How to Calculate Total Cost Marginal Cost, Average Variable Cost and, ATC.
For the Costs and Revenue in Perfect Competition Assignment, you will submit an MS Excel spreadsheet.
Make sure to use the “formula” feature. (The numbers in the table change. So, if you don’t use the “formula”, your answers will be incorrect because of the changing numbers.)
Calculate marginal cost (MC), marginal revenue (MR), average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC).
Graph all the cost curves and the MR curve.
Find the profit-maximizing price and output.
Calculate the profit (or loss).
A firm
operating in perfect competition has no influence over market price. It can
sell any amount at the market-clearing price. The only one major decision to
make then is about what quantity should be produced. When it decides the
quantity to produce, then this quantity—along with the prices prevailing in the
market for output and inputs—will determine the firm’s total revenue, total
costs, and ultimately, level of profits.
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