Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q-0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between O and 50; at 50 MC has a minimum; this minimum is MC(50)-10; after q-50, MC is increasing; in particular MC(100)-16, MC(120)-30. The second curve, AVC, starts at the same level of MC(O); it is decreasing when q is between O and 100; in this range AVC is above MC; at q-100, AVC crosses MC; more precisely, AVC(100)-MC(100)-16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between O and 120; in this range is above MC; AC(100)-34: AC and MC cross at q 120; more precisely. AC(120)-MC(120)-30; for q>-120, AC is increasing, below MC and above AVC) MC AC 34 16 10 Output 100 120 If the output price is equal to $30, then the firm maximizes profits by producing? O O units O 100 units 125 units O 120 units O 50 units
Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q-0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between O and 50; at 50 MC has a minimum; this minimum is MC(50)-10; after q-50, MC is increasing; in particular MC(100)-16, MC(120)-30. The second curve, AVC, starts at the same level of MC(O); it is decreasing when q is between O and 100; in this range AVC is above MC; at q-100, AVC crosses MC; more precisely, AVC(100)-MC(100)-16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between O and 120; in this range is above MC; AC(100)-34: AC and MC cross at q 120; more precisely. AC(120)-MC(120)-30; for q>-120, AC is increasing, below MC and above AVC) MC AC 34 16 10 Output 100 120 If the output price is equal to $30, then the firm maximizes profits by producing? O O units O 100 units 125 units O 120 units O 50 units
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section: Chapter Questions
Problem 7PA
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning