For 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 thatquantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down,it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.)PriceQuantityTotal RevenueFixed CostVariable CostProfit(Dollars per air freshener)(Air fresheners)(Dollars)(Dollars)(Dollars)(Dollars)10.0044,00016.0044,00040.0044,000If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if itshuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease).This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-isper air freshener. Suppose that the market for air fresheners is a competitive market. The following graph shows the daily cost curves of a firm operating in this market.40363228ATC16of128.MCAVC101214131820QUANTITY (Thousands of air fresheners)APRICE (Dollars per air freshener)24

For 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 quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per air freshener) (Air fresheners) (Dollars) (Dollars) (Dollars) (Dollars) 10.00 44,000 16.00 44,000 40.00 44,000

For 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 quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per air freshener) (Air fresheners) (Dollars) (Dollars) (Dollars) (Dollars) 10.00 44,000 16.00 44,000 40.00 44,000

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 9P

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According to the accompanying table, what quantity of output should the firm produce? Explain your answer.
Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm’s total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per instant pot) (Instant pots) (Dollars) (Dollars) (Dollars) (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000 If the 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 shuts down, the firm would suffer losses of $1,600,000 per day until its fixed…
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