Assume the market price in a complete market is $12, the current output of company A is 50 pieces, the short-term marginal cost is $15, the average cost is $14, and the average variable cost is $7. a. Has the company A maximized its profits? What is the basis of your judgment? b. If not, what should the company A do to increase profits at this time (assuming that the company's marginal cost is increasing)?
Assume the market price in a complete market is $12, the current output of company A is 50 pieces, the short-term marginal cost is $15, the average cost is $14, and the average variable cost is $7. a. Has the company A maximized its profits? What is the basis of your judgment? b. If not, what should the company A do to increase profits at this time (assuming that the company's marginal cost is increasing)?
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter9: Price Takers And The Competitive Process
Section: Chapter Questions
Problem 15CQ
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Assume the market price in a complete market is $12, the current output of company A is 50 pieces, the short-term marginal cost is $15, the average cost is $14, and the
a. Has the company A maximized its profits? What is the basis of your judgment?
b. If not, what should the company A do to increase profits at this time (assuming that the company's marginal cost is increasing)?
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