4. Given the diagram below, answer the following questions: MC MC ATC AVC $40 s $35 $25 $25 -P-D-MR-AR $23 100 145 250 acin units)

Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Firms In Competitive Markets
Section: Chapter Questions
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Part D E

4. Given the diagram below, answer the following questions:
MC
(+)
MC
ATC
AVC
$40
s $35
$25
$25
P-D-MR-AR
D.
$23
100 145 250
acin unts)
(a) What type of industry is represented by the firm shown on the right?
(b) What is the equilibrium price and quantity charged by the firm? State the condition
used to derive this answer.
(c) Is the firm in short-run or long run? Is the firm making profit or loss? Calculate the
amount of profit or loss with steps.
(d) What does the diagram on the left represent?
(e) Will the firm continue to produce or shut-down/exit? Why?
%24
Transcribed Image Text:4. Given the diagram below, answer the following questions: MC (+) MC ATC AVC $40 s $35 $25 $25 P-D-MR-AR D. $23 100 145 250 acin unts) (a) What type of industry is represented by the firm shown on the right? (b) What is the equilibrium price and quantity charged by the firm? State the condition used to derive this answer. (c) Is the firm in short-run or long run? Is the firm making profit or loss? Calculate the amount of profit or loss with steps. (d) What does the diagram on the left represent? (e) Will the firm continue to produce or shut-down/exit? Why? %24
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