Suppose the industry for physicians providing flu vaccinations is perfectly competitive, and all companies have production functions and cost functions that are identical and illustrated by the production process in the table below.

VaccinationsLabsHoursTCTFCTVCATCAFCAVCMC
010.005005000    
111.00700500200 500.00200.00200
211.50800500300 250.00150.00100
311.75850500350 166.67116.6750
411.90880500380 125.0095.0030
512.10920500420 100.0084.0040
612.40980500480 83.3380.0060
712.851070500570 71.4381.4390
813.451190500690 62.5086.25120
914.351370500870 55.5696.67180
1015.8516705001170 50.00117.00300
  1. What are the three primary characteristics of a perfectly competitive market?
    1. Large number of firms, homogeneous product, free entry and exit
  2. Determine the total cost (TC), total fixed cost (TFC), total variable cost (TVC), average total cost (ATC), average fixed cost (AFC), average variable cost (AVC), and the marginal cost (MC) of cleaning offices in the table.
  3. Graph the ATC, AFC, AVC, and MC curves.

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