For each price in the following table, use the graph to determine the number of lamps this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero lamps and the loss-minimizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Output (Dollars per lamp) (Lamps) Produce or Shut Down? Profit or Loss? 15 20 25 55 70 85
For each price in the following table, use the graph to determine the number of lamps this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero lamps and the loss-minimizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Output (Dollars per lamp) (Lamps) Produce or Shut Down? Profit or Loss? 15 20 25 55 70 85
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter8: Perefect Competition
Section: Chapter Questions
Problem 7SQP
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Question
Then, plot points along the portion of the firm's short-run supply curve that corresponds to
Transcribed Image Text:Consider the perfectly competitive market for halogen lamps. The following graph shows the marginal cost (MC), average total cost (ATC), and
average variable cost (AVC) curves for a typical firm in the industry.
100
90
80
70
60
АТC
50
40
30
AVC
20
MC
10
+
+
+
+
10
20
30
40
50
60
70
80
90
100
QUANTITY OF OUTPUT (Thousands of lamps)
PRICE AND COST PER UNIT (Dollars)
Transcribed Image Text:For each price in the following table, use the graph to determine the number of lamps this firm would produce in order to maximize its profit. Assume
that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero lamps and the loss-minimizing
quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will
make a profit, suffer a loss, or break even at each price.
Price
Output
(Dollars per lamp)
(Lamps)
Produce or Shut Down?
Profit or Loss?
15
20
25
55
70
85
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