Chapter 12, Problem 12P

To determine

Concept Introduction

Marginal Cost: This refers to the change in cost which is incurred when an additional unit of any good or service is produced. It shall be calculated as follows:

Average Total Cost: This refers to the total cost per unit which includes both fixed and variable cost at a particular level of production. It shall be calculated as follows:

Perfect Competition: This is a situation that prevails in the market where there are numerous buyers and sellers. When a market is in perfect competition, the price of a product cannot be influenced by a single buyer or seller.

Supply Curve: This is the relationship between the quantities supplied by the producers in the market for a good or service at different prices, shown with the help of a graph.

Demand Curve: This is the relationship between the quantities demanded by the consumers of a good or service at different prices, shown with the help of a graph.

Break-even Price: This is the level of price when the economic profit is zero. The price is said to break-even when it is in equilibrium in the long-run. This happens when the price is equal to the lowest average total cost.