# Larry’S Linens Produces White Cloth Napkins For Restaurants In A Perfectly Competitive Market The Table Below

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CHAPTER 9: COMPETITIVE MARKETS
209
Output TVC TFC
TC
MC
ATC
0
AVC
0
100
100
40
100
200
70
100
300
120
100
400
180
100
500
250
100
600
330
100
700
420
100
800
520
100
IIIIIIIII
IIIIIII
IIIIIIIP!
900
630
100
a. Complete the cost schedule for this firm by cal-
culating TC, MC, ATC, and AVC. Remember to
record the MC figures between the rows of output
and total cost.
b. Draw a scale diagram and plot ATC, AVC, and
MC.
c. Below which price should this firm choose to pro-
duce zero output?
d. If the market price per napkin is \$0.80, what is this
firm’s profit-maximizing level of output? Since MC
is calculated between the rows of the output levels
given, state the range of output in which the profit-
maximizing level of output will fall. Do the same
for market prices of \$0.60 and \$1.00.
e. Calculate the firm’s profit per unit and total profit
per day at an output level of 450 napkins per day
and at a market price of \$0.70.Microeconomics