The graph below summarizes the demand and costs for a firm that operates in a perfectly competitive market.Instruction: Use the nearest whole numbers on the graph when calculating numerical responses below.4844-MCATC40-36-32-D'=MR2824-AVC20-16-12-AFC4 -12371011Quantity%24 d. What is the firm's total variable cost at this level of output?e. What is the firm's fixed cost at this level of output?f. What is the firm's profit if it produces this level of output?Instruction: If the firm is taking a loss, enter this as negative (-) profits.$%24%24

d. What is the firm's total variable cost at this level of output? e. What is the firm's fixed cost at this level of output? f. What is the firm's profit if it produces this level of output? Instruction: If the firm is taking a loss, enter this as negative (-) profits. %24 %24

d. What is the firm's total variable cost at this level of output? e. What is the firm's fixed cost at this level of output? f. What is the firm's profit if it produces this level of output? Instruction: If the firm is taking a loss, enter this as negative (-) profits. %24 %24

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter23: Profit Maximization

Section: Chapter Questions

Problem 6E

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Question

The graph below summarizes the demand and costs for a firm that operates in a perfectly competitive market.
Instruction: Use the nearest whole numbers on the graph when calculating numerical responses below.
48
44-
MC
ATC
40-
36-
32-
D'=MR
28
24-
AVC
20-
16-
12-
AFC
4 -
1
2
3
7
10
11
Quantity
%24

d. What is the firm's total variable cost at this level of output?
e. What is the firm's fixed cost at this level of output?
f. What is the firm's profit if it produces this level of output?
Instruction: If the firm is taking a loss, enter this as negative (-) profits.
$
%24
%24

Expert Solution

Step 1

Total variable cost refers to the cost of production that changes with a change in the level of production. Total fixed cost refers to the cost of production that does not change with a change in the level of production.

Step 2

A perfectly competitive firm produces where the marginal revenue is equal to the marginal cost. In the given figure, the marginal revenue and marginal costs are equal at the 7^th unit. The total variable cost of the firm can be calculated by multiplying the average variable cost of the firm with quantity. Since the average variable cost curve and the given level of production intersects at where the price is equal to $14, the total variable cost of the firm can be calculated as follows.

The calculated value shows the total variable cost of the firm is equal to $98.

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