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 _______.
Correct Answer:
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Table 1:
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