Consider a firm operating in a competitive market in the short run. The table below shows the firm’s total cost of production at various output levels.  Assume the firm cannot supply more than 7 units in the short run. At a market price of $10, how many units of output should the firm supply?Output (q) FC ($) VC ($)0 10 01 10 22 10 63 10 104 10 155 10 216 10 307 10 40

To determine how many units of output the firm should supply, we need to calculate the marginal cost (MC) for each additional unit of output and compare it with the market price. The marginal cost is the change in total cost (TC) that arises when the quantity produced changes by one unit.

Here's how we calculate it:

1. First, calculate the total cost (TC) for each output level. The total cost is the sum of fixed costs (FC) and variable costs (VC). For example, the total cost for 1 unit of output is $10 (FC) +$2 (VC) = $12.

2. Next, calculate the marginal cost (MC) for each additional unit of output. The marginal cost is the change in total cost divided by the change in quantity. For example, the marginal cost of increasing output from 1 unit to 2 units is ($16 -$12) / (2 - 1) = $4.

3. Compare the marginal cost with the market price. If the marginal cost is less than or equal to the market price, the firm should produce that unit of output. If the marginal cost is greater than the market price, the firm should not produce that unit of output.

Here's the calculation for each output level:

Output (q) FC ($) VC ($) TC ($) MC ($) 0 10 0 10 - 1 10 2 12 2 2 10 6 16 4 3 10 10 20 4 4 10 15 25 5 5 10 21 31 6 6 10 30 40 9 7 10 40 50 10

At a market price of $10, the firm should produce 7 units of output because the marginal cost of the 7th unit is equal to the market price.