Below is a data of the per-unit costs incurred by a competitor in selling face mask per pack (5 masks per pack) per day. AFC (P) Output (in packs) 0 1 2 3 4 5 6 7 8 9 10 60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 AVC (P) 45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 ATC (P) 105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 MC (P) 45.00 40.00 35.00 30.00 35.00 40.00 45.00 55.00 65.00 75.00 A. Assuming that the product's price is P58 per pack, should the competitor sell in the short-run? Why or why not? If it decides to sell, what will be the profit-maximizing (or loss-minimizing output per day)? What is the profit (or loss) that the seller can realize per day? What is the profit (or loss) per pack? B. Assuming that the product price is P42 per pack, answer the same questions in letter A. C. Because of increasing sellers of masks in the market, the product's price further decreased to P32 per pack. Again, answer the same questions in letter A. D. When is this seller going to shut down? E. Now generate the seller's supply curve of mask in the short run.

Below is a data of the per-unit costs incurred by a competitor in selling face mask per pack (5 masks per pack) per day. AFC (P) Output (in packs) 0 1 2 3 4 5 6 7 8 9 10 60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 AVC (P) 45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 ATC (P) 105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 MC (P) 45.00 40.00 35.00 30.00 35.00 40.00 45.00 55.00 65.00 75.00 A. Assuming that the product's price is P58 per pack, should the competitor sell in the short-run? Why or why not? If it decides to sell, what will be the profit-maximizing (or loss-minimizing output per day)? What is the profit (or loss) that the seller can realize per day? What is the profit (or loss) per pack? B. Assuming that the product price is P42 per pack, answer the same questions in letter A. C. Because of increasing sellers of masks in the market, the product's price further decreased to P32 per pack. Again, answer the same questions in letter A. D. When is this seller going to shut down? E. Now generate the seller's supply curve of mask in the short run.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 8E

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