You should do this problem in three steps. First: Fill in Table 1. Assume fixed cost is $1000 and price is $575.
Table 1:
Table 2:
Second: Draw a graph of the firm's demand, marginal revenue, average variable cost, average total cost, and marginal cost curves on a piece of graph paper. Be sure to label the graph correctly. On the graph, indicate the break-even and shutdown points and the firm's short-run and long-run supply curves. Third: Calculate total profit in the space below, then answer questions a through d.
(a) The minimum price the firm will accept in the short run is $_______. (b) The minimum price the firm will accept in the long run is $_______. (c) The output at which the firm will maximize profits is ______. (d) The output at which the firm will operate most efficiently is _______.

Question

You should do this problem in three steps. First: Fill in Table 1. Assume fixed cost is $1000 and price is $575.
Table 1:  
Table 2:
Second: Draw a graph of the firm's demand, marginal revenue, average variable cost, average total cost, and marginal cost curves on a piece of graph paper. Be sure to label the graph correctly. On the graph, indicate the break-even and shutdown points and the firm's short-run and long-run supply curves. Third: Calculate total profit in the space below, then answer questions a through d.
(a) The minimum price the firm will accept in the short run is $_______. (b) The minimum price the firm will accept in the long run is $_______. (c) The output at which the firm will maximize profits is ______. (d) The output at which the firm will operate most efficiently is _______.

Quizplus · Accepted Answer

The Answer of You should do this problem in three steps. First: Fill in Table 1. Assume fixed cost is $1000 and price is $575.
Table 1:  
Table 2:
Second: Draw a graph of the firm's demand, marginal revenue, average variable cost, average total cost, and marginal cost curves on a piece of graph paper. Be sure to label the graph correctly. On the graph, indicate the break-even and shutdown points and the firm's short-run and long-run supply curves. Third: Calculate total profit in the space below, then answer questions a through d.
(a) The minimum price the firm will accept in the short run is $_______. (b) The minimum price the firm will accept in the long run is $_______. (c) The output at which the firm will maximize profits is ______. (d) The output at which the firm will operate most efficiently is _______.

You Should Do This Problem in Three Steps