90 80 ATC 70 60 50 40 30 AVC 20 10 MC 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of microwaves) each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that ntity, using the data from the preceding graph to identify its total variable cost. Assume that if the firm is indifferent between producing and tting down, it will produce. (Hint: You can select the purple points (diamond symbols) on the previous graph to see precise information on average able cost.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit Dollars per microwave) (Microwaves) (Dollars) (Dollars) (Dollars) (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000 he firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it ts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease). firm's shutdown point-that is, the price below which it is optimal for the firm to shut down-is_ per microwave. PRICE (Dollars per microwave)

Question

Suppose that the market for microwave ovens is a competitive market. The following graph shows the daily cost curves of a firm operating in this market.

90
80
ATC
70
60
50
40
30
AVC
20
10
MC
5
10
15
20
25 30
35
40
45
50
QUANTITY (Thousands of microwaves)
each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that
ntity, using the data from the preceding graph to identify its total variable cost. Assume that if the firm is indifferent between producing and
tting down, it will produce. (Hint: You can select the purple points (diamond symbols) on the previous graph to see precise information on average
able cost.)
Price
Quantity
Total Revenue Fixed Cost
Variable Cost
Profit
Dollars per microwave) (Microwaves)
(Dollars)
(Dollars)
(Dollars)
(Dollars)
25.00
1,600,000
70.00
1,600,000
100.00
1,600,000
he firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it
ts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease).
firm's shutdown point-that is, the price below which it is optimal for the firm to shut down-is_
per microwave.
PRICE (Dollars per microwave)
Expand
Transcribed Image Text

90 80 ATC 70 60 50 40 30 AVC 20 10 MC 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of microwaves) each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that ntity, using the data from the preceding graph to identify its total variable cost. Assume that if the firm is indifferent between producing and tting down, it will produce. (Hint: You can select the purple points (diamond symbols) on the previous graph to see precise information on average able cost.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit Dollars per microwave) (Microwaves) (Dollars) (Dollars) (Dollars) (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000 he firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it ts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease). firm's shutdown point-that is, the price below which it is optimal for the firm to shut down-is_ per microwave. PRICE (Dollars per microwave)

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