Homework Help is Here – Start Your Trial Now!
Business
Economics
Answer questions below using the cost curves for the price-taking firm shown in the following graph: SMC ATC €0 A a 5 Price and cost (dallan) T AVC

Answer questions below using the cost curves for the price-taking firm shown in the following graph: SMC ATC €0 A a 5 Price and cost (dallan) T AVC

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 39P: The AAA Aquarium Co. sells aquariums for 20 each. Fixed costs of production are 20. The total...
See similar textbooks
icon
Related questions
Question

economics. answer only g,h

2. Answer the questions below using the cost curves for the price-taking firm shown in the following graph: SMC ATC AVC 0 100 200 300 400 500 600 700 800 900 Output a. If price is $7 per unit of output, draw the marginal revenue curve. The manager should produce units to maximize profit. b. Because average total cost is $ for this output, total cost is $ c. The firm makes a profit of $ d. At. units, profit margin (or average profit) is maximized. Why is this output level different from the answer to part a? e. Let price fall to $3, and draw the new marginal revenue curve. The manager should now produce units to maximize profit. f. Total revenue is now $ and total cost is $ The firm makes a loss of $ g. Total variable cost is $ „ leaving $ to apply to fixed cost. k. If price falls below $ the firm will produce zero output. Explain why. O OD 7 Price and cost (dollars) 2 0 40 4 2 T
Transcribed Image Text:2. Answer the questions below using the cost curves for the price-taking firm shown in the following graph: SMC ATC AVC 0 100 200 300 400 500 600 700 800 900 Output a. If price is $7 per unit of output, draw the marginal revenue curve. The manager should produce units to maximize profit. b. Because average total cost is $ for this output, total cost is $ c. The firm makes a profit of $ d. At. units, profit margin (or average profit) is maximized. Why is this output level different from the answer to part a? e. Let price fall to $3, and draw the new marginal revenue curve. The manager should now produce units to maximize profit. f. Total revenue is now $ and total cost is $ The firm makes a loss of $ g. Total variable cost is $ „ leaving $ to apply to fixed cost. k. If price falls below $ the firm will produce zero output. Explain why. O OD 7 Price and cost (dollars) 2 0 40 4 2 T
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Market Demand
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
ECON MICRO
ECON MICRO
Economics
ISBN:
9781337000536
Author:
William A. McEachern
Publisher:
Cengage Learning
Principles of Microeconomics
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Exploring Economics
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS