ion 5 of 20The accompanying graph depicts the Marginal Cost (MC),Average Cost (AC), Marginal Revenue (MR), and Demand(D) curves for a competitive firm.20MCa. Move point E to the profit maximiznig price and quantityon the graph.18AC16b. What price should this firm charge to maximize profit?1412D= MR10Profit-maximizing price: $64c. How many units should this firm produce to maximize2profit?2468101214161820QuantityProfit-maximizing output:unitsPrice, MR, MC ($)

Perfect competition refers to the form of market in which there is large numbers of buyers and…

The accompanying graph depicts the Marginal Cost (MC), Average Cost (AC), Marginal Revenue (MR), and Demand (D) curves for a competitive firm. a. Move point E to the profit maximiznig price and quantity on the graph. b. What price should this firm charge to maximize profit? Profit-maximizing price: $ c. How many units should this firm produce to maximize profit?

The accompanying graph depicts the Marginal Cost (MC), Average Cost (AC), Marginal Revenue (MR), and Demand (D) curves for a competitive firm. a. Move point E to the profit maximiznig price and quantity on the graph. b. What price should this firm charge to maximize profit? Profit-maximizing price: $ c. How many units should this firm produce to maximize profit?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 6P

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Assume that apples are produced in a perfectly competitive market. Grande’s Orchard is a typical firm that grows and sells apples. Currently, Grande earns zero economic profit, and the market price of apples is $10 per bushel. (a) Draw a correctly labeled graph showing Grande’s demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled QG . (b) Suppose an increase in the popularity of apple cider increases the demand for apples. How will the increase in the demand for apples affect Grande’s economic profit in the short run? Explain. (c) What will happen to Grande’s economic profit in the long run? Explain. BoldItalicUnderline