Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 11.6, Problem 1QQ
To determine
Price determination.
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The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal
revenue curve for a firm for different levels of output.
Price
R
W
S
L
0
A
F
B
G
C
M
At the profit-maximizing level of output:
MC
ATC
AVC
MR
Quantity
a. the firm is earning economic profit.
b. profits per unit are the highest relative to all other output choices.
c. profit equals ZC.
d. costs exceed revenue.
Price
Average total cost
AVC
Demand
Marginal
cost
Marginal revenue
Q
Quantity
Discuss the firm plotted on the figure. What type of firm do you see?is the firm operating at the optimal point of production? is the firm making a proht? s the firm operating in
the short or in the long run?
The short-run supply curve for a price-taking firm
is given by:
Select one:
a. its short-run marginal cost curve above
average fixed cost
b. its entire short-run marginal cost curve
c. its short-run marginal cost curve above
minimum average total cost
d. its short-run marginal cost curve above
minimum average variable cost
e. the positively sloped portion of its average cost
curve
Chapter 11 Solutions
Economics (Irwin Economics)
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- The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal revenue curve for a firm for different levels of output. Price R W S 0 A F H B G MC K ATC AVC MR Quantity Assuming that price at OR is $10, the profit maximizing level of output for the firm is 1. OA where marginal cost just covers AVC 2. OB where average profit per unit is the greatest 3. OC where marginal cost equals the $10 price 4. OK where average cost equals marginal revenue and the firm earns a normal rate of returnarrow_forwardPrice MC ATC IC MR Quantity a. What area(s) of the graph represent(s) total revenue for this firm if it was profit maximizing? b. What area(s) of the graph represent(s) total cost for this firm if it was profit maximizing? c. What area(s) of the graph represent(s) profits for this firm if it was profit maximizing? d. What area(s) of the graph represent(s) deadweight loss if the firm was profit maximizing?arrow_forwardConsider a kettle firm A in a perfectly competitive market. Table 1 shows the quantity produced per hour (Q) and the total cost (TC) in the short run. Quantity 0 12345C70 2 6 8 Total cost 17 30 40 55 75 100 130 165 210 Fixed cost 17 17 17 17 17 17 17 17arrow_forward
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