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)

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)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3PA

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Similar questions

Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?
Are there fixed costs in the lung-run? Explain briefly.
How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.