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3 October, 06:18

3. The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry. Our firm produces 10,000 guidebooks for an average total cost of $38, marginal cost of $30, and average variable cost of $30. Our firm, in the short run, should:

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  1. 3 October, 06:37
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    The answer is produce more book because there will be a profit of $5 for each additional guidebook

    Explanation:

    Marginal cost is that the cost of manufacturing one additional unit of a product or service.

    Equilibrium Price is $35

    Marginal cost is is $30

    Equilibrium Price is higher or greater than marginal cost (P > MC)

    Since equilibrium price is above (greater) marginal cost, then it'll be profitable to manufacture or prodduce additional unit (s) of guidebook, and the profit will be:

    $35 - $30

    =$5
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