Exhibit 7-8

-According to Exhibit 7-8,the output level of the short-run equilibrium for this firm is:

Question

Exhibit 7-8
 
-According to Exhibit 7-8,the output level of the short-run equilibrium for this firm is:

Quizplus · Accepted Answer

The short-run equilibrium output level for this firm is where marginal cost (MC) intersects with marginal revenue (MR) which is at the output level of 110. At this output level, the firm is able to cover its variable cost (VC) and make an economic profit represented by the rectangle between the price (P) and the average variable cost (AVC) which is (P-AVC)*output = (170-60)*110 = 12,100.

Exhibit 7-8 -According to Exhibit 7-8,the Output Level of the Short-Run Equilibrium