The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) in the figure below. The market price is $10. a. What is the firm's marginal revenue? $ b. What is the firm's profit-maximizing output level? units Price/Cost $50 $40 $30
The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) in the figure below. The market price is $10. a. What is the firm's marginal revenue? $ b. What is the firm's profit-maximizing output level? units Price/Cost $50 $40 $30
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 11PA: Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2...
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Question
10
Transcribed Image Text:The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a firm are shown
in the figure below. The market price is $10.
a. What is the firm's marginal revenue? $
b. What is the firm's profit-maximizing output level?
units
c. What is the firm's profit (or loss) per unit at this
level of output? $
(use a
negative sign for losses)
What is its total profit (or loss) at this level of
output?
(again, use a
negative sign for losses)
Price/Cost
$50
$40
$30
$20
$10
0
10
20
30
Quantity
d. Will this firm produce in the short-run? Why or why not?
MC
40
ATC
P- $10
e: Briefly describe what will happen in the long run, using the same details we saw in Question 5. Will
this firm stay in business? Will it earn a profit in the long-run? What will happen to the number of
firms in the industry? What about the market price?
AVC
50
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