How much output should Sindbad produce to maximize his profit, if the market price is equal to $11? How much profit (loss) will he earn? Indicate the profit (loss) area on the graph. Suppose Sindbad decides to shut down. What would his loss be?

How much output should Sindbad produce to maximize his profit, if the market price is equal to $11? How much profit (loss) will he earn? Indicate the profit (loss) area on the graph. Suppose Sindbad decides to shut down. What would his loss be?

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 7QAP

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Question

The following attached graph represents the situation of Sindbad’s caps, a firm selling caps in the perfectly competitive caps industry.

please no handwriting graph

QUESTION 1

How much output should Sindbad produce to maximize his profit, if the market price is equal to $11?
How much profit (loss) will he earn? Indicate the profit (loss) area on the graph.
Suppose Sindbad decides to shut down. What would his loss be?

Price
MC
and cost
(dollars
per cap)
AIC
AVC
S1100
MR
9.00
6.00
50
80 100
Quantity
(caps por day)

Definition Definition Amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item

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