Problem - Total Revenue, Average Revenue, Marginal Revenue

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Question

You are given the following data about two firms:

FIRM A

Quantity	0		1		2		3		4		5		6
Total revenue ($)	0		10		20		30		40		50		60
Average revenue ($)	0		10		10		10		10		10		10
Marginal revenue ($)		10		10		10		10		10		10
Total cost ($)	30		42		50		60		76		100		140
Marginal cost ($)		12		8		10		16		24		40
Average cost ($)	∞		42		25		20		19		20		23.3333333

FIRM B

Quantity	0		1		2		3		4		5		6
Total cost ($)	100		134		154		177		216		266		366
Average cost ($)	∞		134		77		59		54		53.2		61
Marginal cost ($)		34		20		23		39		50		100
Price ($)	140		130		120		110		100		90		80
Marginal revenue ($)		130		110		90		70		50		30
Total revenue ($)	0		130		240		330		400		450		480

(a) Complete the two tables above.

(b) Are these firms operating in the short or the long run? (1 mark) Firm A: short run / long run

Firm B: short run / long run

Firm B:perfect / imperfect

(d) What level of output will these firms produce in the short run?

Firm A:

Firm B:

(e) How would you describe their profit positions?

Firm A:

Firm B:

Summary:

The question is about two firms A and B which are operating in the same market and are rivals. Their costs and revenues are given. The level of output and profit margin has been determined.

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