Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 32

The data in Table 13P-3 are the monthly average variable costs (AVC), average total costs (ATC), and marginal costs (MC) for Alpacky, a typical alpaca wool-manufacturing firm in Peru. The alpaca wool industry is competitive. For each market price given below, give the profitmaximizing output quantity and state whether Alpacky's profits are positive, negative, or zero. Also state whether Alpacky should produce or shut down in the short run.